THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


A  TREATISE  ON  THE 
LAW  OF  PUBLIC  CONTRACTS 


A  TREATISE  ON  THE  LAW 

OF 

PUBLIC  CONTRACTS 


BY 

JAMES  F.  DONNELLY,  A.B.,  A.M. 

MEMBER  OF  THE  NEW  YORK  CITY  BAB 


BOSTON 

LITTLE,  BROWN,  AND  COMPANY 
1922 


Copyright,  1922, 
By  Little,  Bbown,  and  Company. 


All  rights  reserved 

T 


Printed  in  the  United  States  of  Ambbioa 


PREFACE 

In  the  leisure  hours  which  fell  to  my  lot  in  the  occu- 
pancy of  pubhc  office,  I  undertook  to  gather  notes  upon 
the  law  of  Public  Contracts.  The  practice  of  my  profes- 
sion had  brought  me  in  close  contact  with  this  phase  of  the 
law  in  representing  contractors  for  subways,  railroads, 
reservoirs,  roads,  and  other  public  works.  I  appreciated 
from  experience  the  difficulty  of  ascertaining  the  law  affect- 
ing this  subject  and  set  to  work  in  idle  hours  to  codify  it 
somewhat  for  my  own  benefit. 

As  I  proceeded  with  my  work  it  occurred  to  me  that  no 
book  had  been  written  on  the  law  of  Public  Contracts  and 
so  I  entered  upon  the  task  of  gathering  together  for  the 
benefit  of  the  profession  all  of  the  principles  relating  to  the 
subject.  I  have  done  this  largely  in  the  hope  that  this 
work  might  prove  a  vade  mecum  for  counsel  to  govern- 
mental bodies,  municipal  corporations,  and  public  con- 
tractors. 

The  method  by  which  I  proceeded,  wherever  this  was 
possible,  was  to  state  the  general  principle  aJTecting  the 
particular  subject  in  hand,  then  to  state  the  subsidiary 
principles  or  exceptions  to  the  rule,  and  lastly  to  illuminate 
these,  when  possible,  by  appropriate  illustrations.  In  the 
examination  of  thousands  of  cases  I  have  selected  those 
best  illustrating  the  text  and  have  not  attempted  to  weigh 
down  the  footnotes  by  excessive  citation.  With  very  few 
exceptions  every  case  cited  is  a  pubhc  contract  case. 

The  work  does  not  include  the  subject  of  governmental 
or  municipal  bonds. 

V 


686S17 


PREFACE 

I  desire  to  acknowledge  my  thanks  for  the  kindly 
criticism  and  counsel  which  I  received  from  Mr.  Franz  Sigel 
of  the  New  York  Bar,  who  read  the  work  when  finished 
and  gave  me  the  benefit  of  valuable  suggestions.  My  ac- 
knowledgment of  indebtedness  would  not  be  complete 
without  a  recognition  of  the  assistance  rendered  me  by 
Mr.  Edward  H.  Ryan,  the  librarian  of  the  Bronx  County 

Law  Library. 

James  F.  Donnelly. 

New  York  City,  January  19,  1922. 


VI 


CONTENTS 


PAGE" 

Table  of  Cases xxv 

PART  I 
THE   POWER  TO   CONTRACT 

CHAPTER  I 

KINDS  OF  POWERS 

§      1.  Inherent  Power 1 

§     2.  Express  Power 2 

§     3.  Implied  Power 3 

CHAPTER  II 

WHERE    POWER    LODGED — LIMITATIONS    ON    AND    EXHAUSTION    OF    POWER 

§     4.  Who  Possesses  Power 6 

§     5.  Limitations  on  Power 7 

§     6.  Exhaustion  of  Power 9 

CHAPTER  III 

CONTROL  OF  EXERCISE  OF  POWERS  BY  JUDICIAL  AND  LEGISLATIVE  BRANCHES 

OP  GOVERNMENT 

§     7.  Judicial  Control 13 

§     8.  Legislative  Control 16 

CHAPTER  IV 

SURRENDER  OR  BARTER  OF  DISCRETIONARY  POWERS — BINDING  SUCCESSORS 

§     9.  Surrender  and  Barter  of  Legislative  and  Governmental  Power    18 
§    10.  Surrender  of  Legislative  Power — Binding  Successors 22 

CHAPTER  V 

POWERS  OF  OFFICERS 

§    11.  Powers  of  Public  Officers  to  make  Contracts 26 

§    12.  When  Public  Body  is  Bound  by  Acts  of  Public  Officers 29 

vii 


CONTENTS 

PAGE 

§    13.  Public  Officer  Signing  Individually 31 

§    14.  Liability  of  Public  Officers 31 

§  15.  Agents — Omission  to  Perform  Extrinsic  Act  wlrich  is  Founda- 
tion of  Authority  to  Act 31 

§    16.  Powers  of  Particular  Officers 32 

CHAPTER  VI 

MANNER  OF  EXERCISING  POWERS 

I    17.  When  Manner  Is  or  Is  Not  Prescribed 34 

§    18.  Defects  in  Preliminary  Proceedings 35 

§    19.  Failure  to  Follow  Statute — Unimportant  Variances 36 

CHAPTER  VII 

GIFTS  TO   PUBLIC  BODY   TO   INDUCE   EXERCISE   OF  POWERS 

§    20.  Gifts  for  Location  of  Public  Buildings 37 

§    21.  Gifts  for  Location  of  Public  Buildings— Is  it  Bribery? 38 

§    22.  Gifts  to  Public  Body  in  Consideration  of  Street  Improvement    39 

CHAPTER  VIII 

POWER  TO  ENGAGE   IN   OR  TO   AID   PRIVATE   ENTERPRISE 

§    23.  Engaging  in  Private  Enterprise — Rule  Stated 41 

§    24.  History  of  Development  of  Municipal  Enterprise 42 

§    25.  History  of  Municipal  Enterprise — View  of  Courts  too  Narrow    45 

§    26.  Proper  Objects  of  Home  Rule  Should  be  Attained 49 

§    27.  Views  of  Justice  Holmes — A  True  Basis 50 

§    28.  Limitations    on    Municipal    Enterprise — Rules    Controlling 

Limitations 51 

§    29.  Implied  Power  to  Engage  in  Private  Business 52 

§    30.  Power  to  Authorize  Municipal  Enterprise  Exists  in  State 

Legislature 53 

§    31.  Emergency  Which  Will  Authorize — Engaging  in  Municipal 

Enterprise  Without  Express  Authorization 56 

§    32.  Power   to   Authorize   Municipalities   to   Engage  in   Certain 

Enterprises  Does  Not  Exist 56 

§    33.  Sale  of  Fuel  by  Municipahties 58 

§  34.  Power  to  Authorize  Use  of  Public  Money  to  Erect  Homes  for 
Wage  Earners — To  Acquire  Surplus  Land  in  Street  Widen- 
ing and  Use  Same  to  Promote  Manufacture 59 

§    35.  Power  to  Engage  in  Certain  Enterprises  May  Be  Conferred . .     60 

viii 


CONTENTS 

PAGE 

§   36.  Usual  Powers  of  Municipalities  in  America 60 

§   37.  Aid  to  Private  Enterprise 61 

§    38.  Power  to  Engage  in  Ownership  and  Operation  of  Railroads ....  64 
§    39.  Private  Enterprise — Erection  of  Halls  for  Public  Assembly — 

What  Private  Uses  Permitted 66 

§    40.  Private  Enterprise — Erection  of  Public  Buildings — Renting 

of  Same 67 

CHAPTER  IX 

LOANS  OR  GIFTS  OF   MONEY  OR  CREDIT 

§  41.  Loan  or  Gift  of  Money  to  Individual 69 

§  42.  Payment  of  Moral  Obligation 69 

§  43.  Power  to  Indemnify  Public  Officials 72 

§  44.  Power  to  Indemnify  Where  No  Public  Rights  are  Concerned . .  74 

§  45.  Loan  of  Credit 74 

§  46.  The  Same:  Acting  as  Surety 76 

§  47.  Acting  as  Trustee 77 

CHAPTER  X 

CONTRACTS  TO  INFLUENCE  ACTION   OF   PUBLIC  OFFICIALS 

§   48.  General  Rule 79 

§   49.  Effect  on  Contract  of  Influence  on  Action  of  Officials 79 

§   50.  Purchasing  Consents  for  Street  Improvement 82 

CHAPTER  XI 

ULTRA   VIRES   CONTRACTS 

§    51.  Classification 83 

§   52.  Contract  Prohibited  By  Law — Receipt  of  Benefits 84 

§   53.  When  Sustained  so  far  as  Executed 85 

§   54.  Illegal  Contract — Recovery  on  Denied 87 

§    55.  The  Same — InvaUd  in  Part — Severance 87 

§    56.  Invalid  in  Part — Severance — Valid  Part  Enforceable 89 

§    57.  Incurring  Valid  Debt  or  Obligation  but  Exceeding  Limit  on 

Power  to  Incur  Indebtedness — Severance 91 

§    58.  Contract  Beyond  Powers  of  Public  Body  and  Beyond  Scope  of 

Corporate  Purposes — Receipt  of  Benefits 94 

§   59.  Where  Want  of  Power  but  no  Express  Prohibition — Receiv- 
ing Benefits  of  Performance 94 

§   60.  Where  Want  of  Power  but  no  Express  Prohibition — Receiving 

Benefits  of  Contract — Measure  of  Recovery  Permitted ....  96 
ix 


CONTENTS 

PAGE 

§    61.  Defective  Execution 99 

§    62.  jNIaking  Contract  Valid  in  Substance  but  Invalid  in  Extent  of 

Exercise  of  Power 99 

§    63.  Want  of  Power  to  Enter  into  Contract — Equitable  Relief. .  .  .   100 

§    64.  Illegal  Contract — Relief  in  Equity — Cancellation 101 

§    65.  Illegality— Ratification— Waiver 101 

§    66.  Estoppel 103 

i    67.  Voluntary   Payment — Recovery   Back   by   Public   Body   of 

Money  Paid  Under  an  Illegal  Contract 104 

CHAPTER  XII 

EXERCISE   OF   PARTICULAR   POWERS 

§  68.  Water  and  Lighting 106 

§  69.  Contracts  Relating  to  Sanitation Ill 

§  70.  Exclusive  Privileges — Monopoly 113 

§  71.  Granting  Franchise  to  Use  Streets 116 

§  72.  Power  to  Arbitrate 118 

§  73.  Compromise  of  Disputed  Claims 119 

§  74.  Contract  with  Attorney 121 

§  75.  To  Acquire  and  Hold  Property 123 

§  76.  To  Sell  Property 124 

§  77.  To  Borrow  Money  and  Incur  Indebtedness 126 

§  78.  To  Assume  Responsibilities  which  the  Law  Places  on  Others  128 
§  79.  Expending  Money  for  Purposes  not  Public  and  Making  Con- 
tracts to  Carry  Out  Such  Objects 128 

CHAPTER  XIII 

IMPAIRING  OBLIGATION   OF   CONTRACTS 

§    80.  Impairment  of  Obhgation 132 

§   81.  Obligation  of  Contract— Power  of  Public  Body  to  Change 

Laws  Forming  Basis  of  Contract 134 

PART   II 

CREATION  AND  FORMATION  OF  THE  CONTRACT 

CHAPTER  XIV 

DEFINITION  AND   CLASSIFICATION   OP   CONTRACT 

§    82.  The  Contract  Defined 135 

§   83.  ImpUed  Contracts— Defined  and  Classified 136 

X 


CONTENTS 
CHAPTER  XV 

OFFER  AND  ACCEPTANCE 

PAGE 

§    84.  Acceptance  of  Offer 138 

§  85.  Acceptance  of  a  Proposal  which  Follows  Advertisement  as  a 

Contract 140 

§    86.  Ofifer— Terms  ImpHed  by  Law 140 

§    87.  Bid  as  Offer 141 

§    88.  Negotiations  Prehminary  to  Contract 142 

§   89.  Meeting  the  Offer 143 

CHAPTER  XVI 

OTHER  ELEMENTS  OF   CONTRACT 

§    90.  Validity  of  Contract 145 

§    91.  Essential  Elements  of  Contract 147 

§    92.  Delivery  Essential 149 

§    93.  Assent 150 

§    94.  Reality  of  Assent 151 

§   95.  Mutuality  Essential 152 

§    96.  Definiteness  and  Certainty  are  Essential 153 

§    97.  Consideration 155 

§    98.  Fraud  Avoids  a  Contract 157 

§    99.  Illegahty 160 

§  100.  Pubhc  PoHcy 163 

§  101.  Contracts  against  Public  FoUcy — Fees  of  Public  Officers 164 

CHAPTER  XVn 

WHEN   PUBLIC  CONTRACT  IMPLIED 

§  102.  Implied  Contracts — When  Liability  upon  Imphed  Obligation 

Will  Arise 166 

§  103.  Taking  or  Using  Property  in  Performance  of  Duty  but  Against 

Will  of  Owner 167 

§  104.  Where  Money  is  Received  or  Property  Appropriated 168 

§  105.  When  Obligation  Arises  for  Money  Had  and  Received — Trust 

Liabihty 169 

§  106.  When  Liability  Arises— Failure  to  Comply  with  Statute 170 

§  107.  Emergency  Contracts 170 

§  108.  When  Liability  upon  Implied  Obligation  will  not  Arise 172 

§  109.  When  Contract  not  Implied — Taking  Property  under  Claim  of 

Right 175 

xi 


CONTENTS 

PAGE 

§  110.  Use  and  Occupation  of  Private  Property— Adoption  of  Tor- 
tious Acts  of  Agents 176 

§  111.  Volunteer 177 

CHAPTER  XVIII 

LETTING   OF   PUBLIC   CONTRACTS 

§  112.  Conditions  Precedent 180 

§  113.  Necessity  for  Plans  and  Specifications 180 

§  114.  Notice  for  Proposals  and  Bids — Necessity  of  Advertising. . . .  187 

§  115.  Necessit}'  of  Advertising — Patented  Articles 190 

§  116.  Form  of  Bid 191 

§  117.  Deposit  of  Bids 192 

§  lis.  Modification  of  Bid 193 

§  119.  Mistake  in  Bid — Rescission — Relief  in  Equity 194 

§  120.  Deposit  Money  with  Bids — Forfeiture  Measure  of  Damage 

for  Failure  to  Execute  Contract 197 

CHAPTER  XIX 

LETTING   TO   LOWEST  BIDDER 

§  121.  Lowest  Bidder — Who  is  Bidder — Rules  Determining 200 

§  122.  Limitations  on  Power  to  Reject  Bids 200 

§  123.  Rejecting  all  Bids 201 

§  124.  Making  Award  on  Contingency 202 

§  125.  Award  to  Lowest  Bidder — Competitive  Bidding  Statutes — 

Construed  to  Effect  Purpose 203 

§  126.  Award  of  Public  Contracts — When  No  Statutory  Conditions 

Exist 203 

§  127.  When  Competitive  Bids  not  Required 204 

§  128.  When    Competitive    Bidding    not    Required — Monopoly — 

Patents — Professional  Skill — Special  Knowledge  and  Skill . .  204 
§  129.  When  not  Required— Extra  Work— Substitution  of  Materials  207 
§  130.  When  Competitive  Bids  not  Required — Certificate  of  Head 

of  Department — Prior  Appropriation 208 

§  131.  When  Bids  not  Required 210 

§  132.  The  Same— Emergency 210 

§  133.  Public    Letting — When    Bids    not    Required— Monopoly — 

Patents 212 

§  134.  Letting  of  Public  Contracts — Competitive  Bidding — When 

xii 


CONTENTS 

PAGE 

Bids    not    Required — Scientific    Knowledge — Professional 

Skill 213 

§  135.  Opening  the  Bids 213 

CHAPTER  XX 

FORM  OF  CONTRACT — WRITTEN   CONTRACTS 

§  136.  Necessity  of  Written  Contracts — In  General 215 

§  137.  The  Same— Federal  Statute 215 

§  138.  The  Same— State  Statutes 216 

§  139.  Oral  Modification  of  a  Contract  Required  by  Law  to  be  in 

Writing 217 

§  140.  Opening  of  Bids  and  Adoption  of  Resolution  of  Award — 
Whether  Effective  to  Make  Contract  Where  Writing  Re- 
quired   218 

§  141.  Contract  Signed  by  Only  One  Party 219 

§  142.  Kind  of  Contract  which  Contractor  Must  Sign — Power  of  Pub- 
lic Body  to  Make  Contract  which  Differs  from  Advertisement  219 

CHAPTER  XXI 

MAKING  THE   AWARD 

§  143.  Awarding  Contract — Acceptance  of  Bids 222 

§  144.  The  Same — Acceptance — Where  Contract  is  Made  by  Ordi- 
nance    224 

§  145.  The  Same— Approval  by  Officials 225 

§  146.  The  Same — Necessity  of  Prior  Appropriation 226 

CHAPTER  XXII 

REJECTION    OF    BIDS — REMEDY    OF    LOWEST    BIDDER — RELETTING 

§  147.  Remedy  of  Lowest  Bidder  Where  No  Award  is  Made 229 

§  148.  Remedy  of  Lowest  Bidder  where  Award  is  Made  but  Public 
Body  Refuses  to  Execute  Contract — Mandamus  to  Compel 

Execution 232 

§  149.  Rights  of  Unsuccessful  Bidder 234 

§  150.  Reletting 235 

CHAPTER  XXIII 

STIPULATIONS   OF  THE   CONTRACT 

§  151.  Legal  Stipulations — Illegal  Stipulations 237 

§  152.  Legal  Stipulations — Provision  for  Arbitration 238 

xiii 


CONTENTS 

PAGE 

§  153.  Legal  and  Illegal  Stipulations — Terms  which  May  be  Inserted  240 
§  154.  Provisions  as  to  the  Qualifications  of  Those  Employed  on 

PubUc  Work— Hours  of  Work,  etc 242 

§  155.  Imposing  Liability  for  Injury  to  Property — Increasing  Cost. .  244 
§  156.  Stipulation  to  Maintain  Pavement  During  Period  of  Years . . .  245 

§  157.  Effect  of  Legal  and  Illegal  Stipulations 246 

§  158.  Covenants  Implied  by  Law — Warranties 247 

§  159.  Covenants  Implied  by  Law — Warranty  of  Performance 249 

§  160.  Reserved  Right  to  Make  Alterations  and  Suspend  the  Work. .  252 
§  161.  Reserved  Right  to  Suspend  Work — Who  May  Suspend  Work 

—Effect 255 

§  162.  Reserved  Right  to  Annul 256 

CHAPTER  XXIV 

MODIFICATION   OF  CONTRACT 

§  163.  Right  to  Modify 258 

§  164.  Power  to  Modify 259 

§  165.  Consideration  for  Modification 260 

§  166.  Parol  Modification  of  Written  Contract 262 

§  167.  Effect  of  Modification 263 

PART  III 

CONSTRUCTION  AND  OPERATION  OF  CONTRACT 

CHAPTER  XXV 

GENERAL  RULES 

§  168.  Construction  and  Operation — General  Observations 265 

§  169.  Rules  Should  be  Universal 266 

§  170.  General  Rules  Affecting  Public  Contracts 268 

§  171.  Ambiguity 272 

§  172.  What  Law  Governs  Interpretation 273 

§  173.  Courts  Possess  no  Power  to  Make  New  Contract  for  Parties. .  274 
§  174.  Construction  Should  Effect  Reasonable  Result  and  Lawful 

Purpose 275 

§  175.  Meaning  and  Kind  of  Notice 276 

CHAPTER  XXVI 

SPECIAL   CIRCUMSTANCES 

§  176.  Usages  of  Trade  or  Business 277 

§  177.  Inconsistent  Provisions — Conflicting  Clauses 278 

xiv 


CONTENTS 

PAGB 

§  178.  General  Words  and  Expressions  are  Controlled  by  Specific. . .  279 
§  179.  Prior  Negotiations — Reference  to  in  Construction  of  Meaning 

of  Language  Used 280  ■ 

§  180.  Verbal  Agreements  Merged 281 

§  181.  Insertion  of  Writing  in  Printed  Form 281 

§  182.  Grammatical  Construction 281 

§  183.  Construction  against  Party  Who  Draws  Contract 282 

§  184.  Construction — Sale  of  Goods — Warranty  as  to  Quality  or 

Quantity 283 

§  185.  Operation — Construction — Clause  of  Contract  to  Maintain 

Repairs  and  Pavement 284 

CHAPTER  XXVII 

WHERE   SEVERAL  INSTRUMENTS  FORM  CONTRACT 

§  186.  Several  Instrumental  Parts  of  One  Transaction  Read  Together  286 
§  187.  Several  Statutes  Constituting  Agreement  will  be  Construed 

Together 288 

§  188.  Agreement  to  Agree  to  do  Something 288 

§  189.  Instruments  Annexed  or  Referred  to 288 

§  190.  Reference  to  a  Prior  Abandoned  Contract 289 

CHAPTER  XXVIII 

PARTS   IMPLIED 

§  191.  Existing  Law  Part  of  Contract 290 

§  192.  Terms  Implied  in  Contracts 290 

CHAPTER  XXIX 

EXTRINSIC   CIRCUMSTANCES 

§  193.  Construction  by  the  Parties 294 

§  194.  Evidence  to  Aid  Construction 296 

§  195.  Subject-Matter  of  Contract — Scope  and  Extent  of  Meaning — 

Conditions  at  Site 298 

§  196.  Representations  of  Fact  as  to  Conditions  of  Work  under 
Contract — Person  Making  Them  Bound  and  Must  Bear 
Loss 300 

CHAPTER  XXX 

PRIVITY   OF  CONTRACT 

§  197.  Who  may  Enforce — Contract  for  Benefit  of  Third  Persons 303 

XV 


CONTENTS 
CHAPTER  XXXI 

QUALITY  OF   CONTRACT  _.^„ 

PAGE 

§  198.  Joint  and  Several  Contracts 306 

§  199.  Entire  or  Severable  Contracts 306 

§  200.  Entire  and  Severable  Contracts — Divisibility  of  Considera- 
tion Determining 307 

§201.  Entire   and   Severable   Contracts — Divisibility   of   Work   or 

Objects  of  Contract  as  Determining 308 

§  202.  Entire  and  Severable  Contracts — Estoppel 309 

CHAPTER  XXXII 

COVEXANTS  AND   CONDITIONS 

§  203.  Dependent  and  Independent  Covenants 311 

§  204.  Conditions  Precedent  and  Subsequent 313 

CHAPTER  XXXIII 

TIME   IN   CONTRACT 

§  205.  Time  of  Performance 316 

§  206.  Duration  of  Contract 316 

CHAPTER  XXXIV 

COMPENSATION 

§  207.  Construction — Compensation — Rules  Controlling 319 

CHAPTER  XXXV 

ASSIGNMENT  OF   CONTRACT 

§  208.  Operation — ^Assignment  of  Contract 320 

§  209.  Operation — Assignment  of  Contract — Statute  and  Contract 

Prohibition 321 

CHAPTER  XXXVI 

EXTRA   WORK 

§  210.  What  It  Is 324 

§  211.  Whether  Work  Is,  Depends  upon  True  Construction  of  Con- 
tract— Entirety 325 

§  212.  May  not  be  Claimed  Where  Work  is  Included  in  Contract  or 

is  Voluntarily  Performed 326 

xvi 


CONTENTS 

PAGE 

§  213.  Duty  to  Make  Claim  for  Payment  or  Protest 327 

§  214.  Authority  of  Engineer  or  Architect  to  Order 328 

§215.  Order  or  Request  for  Extra  Work— Must  Come  from  One 

with  Authority 329 

§  216.  Provision  for  Order  in  Writing 329 

§  217.  The  Same— Engineer  or  Architect  may  not  Waive 330 

§  218.  The  Same— Waiver— Estoppel 330 

§  219.  Ratification  of  Act  of  Engineer  in  Failing  to  Issue  Written 

Order 331 

§  220.  Provision  that  Order  in  Writing  must  be  Obtained  Therefor— 

When  not  Applicable 332 

§  221.  Done  by  Order  of  Public  Body— Liability 333 

§  222.  Caused  by  Acts  of  Public  Body  by  Ordering  Superior  Grade 

of  Work  or  Material  than  Required— Making  Work  More 

Expensive 333 

§  223.  Where  Work  Specified  is  Made  More  Expensive  to  do  Through 

Act  of  Public  Body— Where  Less  Expensive 334 

§  224.  Where  Public  Body  Increases  Work  to  be  Done— Changing 

Conditions  at  Site 335 

§225.  Where  Contract  Requires  Complete  Performance  for  Gross 

Sum — Mistake  in  Plans 335 

§226.  Representations   in   Plans   and   Specifications   which   Prove 

Erroneous 336 

§  227.  Omissions  and  Acts  of  Public  Body— Insufficiency  of  Plans  and 

Specifications 337 

§  228.  Where  Contract  Provides  for  Change  without  Compensation 

and  Extra  Work  is  Caused  by  Error  of  Engineer 337 

§  229.  Caused  by  Errors  of  Engineer— Work  under  Special  Statute. .  338 
§  230.  Contractor  Required  to  do  Over  Again  Work  Already  Done  in 

Accordance  with  Contract 338 

§  231.  Where  Work  Done  and  Materials  Furnished  are  Outside  Terms 

of  Contract 340 

§  232.  Extra  Work  Caused  by  Failure  of  Public  Body  to  Perform  Its 

Part  of  Contract— or  by  Delay 342 

§  233.  Where  Estimated  Quantities  are  Approximate  only  and  Work 

or  Material  Ordered  is  Within  Contemplation  of  Parties 343 

§  234.  Exceeding  Appropriation 344 

§  235.  Where  Contract  Makes  Provision  for  Extra  Work  at  Contract 

Prices,  these  Control 344 

§  236.  Provision  that  Same  Shall  be  Paid  for  at  Contract  Price  only 

Applies  to  Reasonably  Proportionate  Increase 345 

§  237.  Unforeseen  Obstruction  or  Difficulties— Outside  Contract 346 

xvii 


CONTENTS 

PAGE 

§  238.  Caused  by  Failure  of  Contractor  to  Properly  Perform  His 

Contract 348 

§  239.  Decision  of  Engineer 349 

§  240.  Conditions  Precedent  to  Recovery  for  Extra  Work 350 

§  241.  Contractor  not  Bound  to  Perform  or  Public  Body  to  Let  it 

to  Him  Unless  Contract  so  Provides 351 


PART  IV 

RESCISSION 

CHAPTER  XXXVII 

RESCISSION   OF  CONTRACT 

§  242.  Rescission— Right  of  Public  Bodies  to  Rescind  Contracts 353 

§  243.  Reserved  Right  to  Terminate 354 

§  244.  Abandonment  of  Right  of  Rescission 355 

§  245.  Grounds  for  Rescission 356 

§  246.  What  Default  Authorizes  Rescission 357 

§  247.  W^aiver  of  Right  to  Rescission 359 

§  248.  Restoring  Status  Quo 360 

§  249.  Effect  of  Rescission 362 

PART  V 

PERFORMANCE  AND  BREACH 

CHAPTER  XXXVIII 

PERFORMANCE — TO   SATISFACTION   OF   ADVERSE    PARTY   OR   THIRD    PERSON 

§  2.50.  Performance  to  Satisfaction  of  Other  Party  or  Engineer 365 

§  251.  Decision  of  Engineer — Duty  of  Engineer 367 

§  252.  Validity  of  Stipulation  Requiring  Certificate  of  Engineer 368 

§  253.  Power  of — Certificate  of  Engineer  not  Extended  Beyond  Sub- 
mission    369 

§  254.  Approval  of  Engineer — Power  to  Modify  or  Alter  Terms  of 

Contract 369 

§  255.  Decision  of  Engineer— Power  to  Require  Doing  of  Work  Ap- 
parently or  Doubtfully  Outside  Terms  of  Contract 371 

§  250.  Efi'ect  of  Failure  of  Engineer  to  Notify  Contractor  During 
Progress  of  Work  that  Work  Does  Not  Comply  with  Con- 
tract   373 

xviii 


CONTENTS 

PAGE 

§257.  Certificate  of  Engineer— Certificate  of  Performance— Condi- 
tion Precedent  to  Payment 373 

§258.  Certificate  of  Engineer,  Valuation  of  Extra  Work,  Condi- 
tion Precedent  to  Payment     374 

§  259.  Certificate  of  Engineer— Condition  Precedent  to  Suit 374 

§  260.  Appeal  from  Decision  of  Engineer 375 

§  261.  Decision  or  Certificate  of  Engineer— Refusal  to  Make 376 

§262,  Decision  or  Certificate  of  Engineer— Power  to  Change  De- 
cision Once  Made 377 

§  263.  Certificates  of  Engineer— Conclusive  in  Absence  of  Mistake, 

Bad  Faith,  etc 378 

§  264.  The  Same— Conclusiveness— Estoppel  Clause 380 

§  265.  The  Same— When  not  Binding  or  Conclusive 380 

§  266.  The  Same— Not  Conclusive— When  Based  on  Erroneous  Con- 
struction of  Contract 382 

§  267.  The  Same— Conclusiveness— Where  Contract  Illegal 382 

§  268.  The  Same— When  Provision  not  Applicable 383 

§  269.  The  Same— When  Production  not  Required— When  Provision 

not  Applicable 384 

§  270.  The  Same— Waiver 385 

§  271.  Acceptance  of  Work  as  Waiver  of  Certificate  of  Engineer 386 

CHAPTER  XXXIX 

PERFORMANCE — PARTIAL   PERFORMANCE 

§272.  Performance— Partial   Performance— Entire   Contract 387 

§  273.  Acceptance  of  Benefits 389 

§  274.  Entire  Contract— Wilful  Refusal  to  Perform 390 

§  275.  Breach  by  Both  Parties 390 

§  276.  Suspension  of  Work 391 

§  277.  Measure  of  Recovery  where  Part  of  Work  is  Performed  by 

Strangers 391 

§  278.  Illegal  Contract 391 

§  279.  Prevention  of  Performance  Because  of  Invalidity  of  Contract 

after  Partial  Performance 392 

§  280.  Interference  with  Contractor  during  Performance — Remedy  in 

Equity — Injunction 392 

CHAPTER  XL 

SUBSTANTIAL  PERFORMANCE 

§  281.  Performance — Rule  Affecting  Substantial  Performance 395 

§  282.  Quantum  Meruit 398 

xix 


CONTENTS 
CHAPTER  XLI 

PERFORMANCE — DELAY  IN  PERFORMANCE  f\QE 

§  283.  Performance — Time  of  Performance— Delay 400 

§  284.  Varying  Causes 403 

§  285.  Rejection  of  Materials 404 

§  286.  Waiver 405 

CHAPTER  XLII 

DEFECTS   IN   PERFORMANCE 

§  287.  Defects  in  Performance 407 

CHAPTER  XLin 

PERFORMANCE — EXCUSE  FOR  NON-PERFORMANCE — IMPOSSIBILITY  OP 
PERFORMANCE 

§  288.  Impossibility  of  Performance— Unforeseen  Conditions 409 

§  289.  Where  Performance  is  Absolutely  Impossible 410 

§  290.  Where  Legal  ImpossibiUty  Arises — General  Rule 411 

§  291.  Legal     Impossibility — Operation    of    Law — Frustration    of 

Objects 411 

§  292.  Act  of  God— Inevitable  Necessity 414 

§  293.  The  Same— Inevitable  Necessity — Destruction  of  Subject 416 

§  294.  Cancellation  of  Contract  Rendering  Performance  of  Sub- 
contractor Impossible 419 

§  295.  Sickness— Death 420 

§  296.  Where  Conditions  Essential  to  Performance  do  not  Exist 421 

§  297.  Physical  ImpossibiUty — Impracticability 422 

CHAPTER  XLIV 

PERFORMANCE — EXCUSE   FOR  NON-PERFORMANCE    OCCASIONED    BY   ACT   OP 

PUBLIC  BODY 

§  298.  Non-Performance  Occasioned  by  Act  of  PubUc  Body 424 

§  299.  Abandonment  of  Contract  by  Public  Body  During  Perform- 
ance—Remedy of  Contractor — Damages— Injunction 426 

CHAPTER  XLV 

PERFORMANCE — ACCEPTANCE   OF 

§  300.  Acceptance  of  Work 428 

§  301.  Waiver  of  Strict  Compliance 429 

XX 


CONTENTS 
CHAPTER  XLVI 

PERFORMANCE   AND   BREACH 

PAGE 

§  302.  Performance — Discharge   of  Contract — By   Breach — Failure 

to  Make  Payment 431 

§  303.  Breach  During  Perfonnance — Refusal  to  Accept  Goods 435 

§  304.  Renunciation — Anticipatory  Breach 435 

§  305.  The  Same— Remedies 437 

§  306.  The  Same — Failure  to  Make  Installment  Delivery  or  Payment 

Under  a  Contract 439 

§  307.  Renunciation  of  Continuing  Contract 442 

§  308.  Performance — Breach — ^Abandonment — When  Justified 443 

§  309.  Executory  Contract — Making  New  and  Modified  Contract — 

Consideration 445 

§  310.  Eifect  of  Breach 446 

§  311.  The  Same— Wilful  Breach 447 

§  312.  Rescission  for  Breach 449 

§  313.  Prevention  of  Performance — Direction  to  Discontinue  Work. .  449 

§  314.  Stopping  Work  Because  of  Dissatisfaction  with  Progress 451 

§  315.  Abandonment 454 

§  316.  Failure  to  Object  or  Take  Advantage  of  Breach  During  Per- 
formance    454 

§  317.  Conditions  Precedent 455 

§  318.  Performance — Covenants  to  Keep  in  Repair 455 

§  319.  Covenant  to  Renew  Lease 456 

§  320.  Money  Due— Set-Off 457 

CHAPTER  XLVII 

PERFORMANCE — NON-PERFORMANCE — COMPLETION   BY    PUBLIC    BODY 

§  321.  Completion  by  Public  Body 458 

§  322.  The  Same— Property  in  Materials 459 

§  323.  Property  in  Excavated  Materials  at  Site — Chattels  at  Site . . .  462 

CHAPTER  XLVIII 

BOND   OF  CONTRACTOR 

§  324.  Statutory  Bond — Power  of  Legislature  to  Require 461 

§  325.  Pubhc  Body  has  ImpUed  Right  to  Require  Bond  for  Faithful 

Performance  and  to  Pay  Laborers  and  Material  Men 464 

§  326.  Construction , 466 

§  327.  Validity  of  Bond  of  Contractor  where  Contract  is  Void — 

Where  Statute  not  Followed 466 

xxi 


CONTENTS 

PAGE 

§  32S.  Effect  of  Naming  Different  Obligee  than  Statute  Provides 468 

§  329.  Statutory''  Provision  Requiring — Waiver  of  Bond  of  Con- 
tractor    468 

§  330.  Public  Officials  have  Discretion  as  to  Sufficiency  of  Bond 

of  Contractor 469 

§  331.  Kind  of  Labor  or  Material  Included  in  State  Statutes 469 

§  332.  \Miat  Labor  and  Materials  Included  under  Federal  Act 472 

§  333.  Limitations  on  Proceedings  under  Federal  Act 473 

§  334.  Who  are  Beneficiaries  under  Statute 474 

§  335.  Who  are  Beneficiaries  under  Statute — Sub-contractors 475 

§  336.  When  Bond  Runs  to  Public  Body — Rights  of  Laborers  and 

Material  Men 475 

§  337.  Condition  of  Bond  of  Contractor  for  Faithful  Performance  of 

Work — Indemnity  for  Public  Body 478 

§  338.  For  Negligence  in  Doing  Work 478 

§  339.  Obligation  of  Public  Body  to  Retain  Money  Due  Contractor 

Who  Fails  to  Pay  for  Labor  and  Material 479 

§  340.  Failure  of  Public  Body  to  Hold  Reserved  Fund  Retained 
under  Contract  Will  Release  Surety — When  not  as  to  Labor- 
ers and  Material  Men 479 

§  34L  Obhgation  of  Surety — Release  of  Surety  Through  Failure  of 
Creditors  of  Contractor  to  File  Claims  and  Secure  Prefer- 
ence    480 

§  342.  Discharge  of  Bond  of  Contractor — Effect  on  Claims  of  Labor- 
ers and  Material  Men 481 

§  343.  Effect  of  Renewal  of  Contract 481 

§  344.  Abandonment  of  Contract — Subrogation  by  Surety  to  Rights 

of  Public  Body — Priority  of  Assignments 482 

§  345.  Liability  of  PubUc  OflBcer  for  Failure  to  Take  Bond  Required 

by  Statute 483 

§  346.  Obhgation  Assumed  by  Public  Body  for  Failure  to  Require 

Contractor  to  Give  Statutory  Bond 484 

§  347.  Condition  Precedent  to  LiabiUty — Limitations 485 

CHAPTER  XLIX 

LIQUIDATED   DAMAGES 

§  348.  General  Rule 486 

§  349.  Construction  of  Stipulation  for  Liquidated  Damages 488 

§  350.  Time  of  Essence — Effect  of  Stipulation  Providing  Remedy  for 

Breach  of  Time  Clauses 489 

§  351.  Money  Contracts 489 

xxii 


CONTENTS 

PAGE 

§  352.  When  Provision  is  not  Considered  a  Penalty 490 

§  353.  Where  Character  of  Clause  is  Doubtful — Doubt  as  to  Amount 

to  be  Paid 491 

§  354.  Effect  of  Calling  Clause  "Liquidated  Damages" 492 

§  355.  Where  Subject-Matter  of  Contract  is  of  Uncertain  Value 492 

§356.  Contract  Containing  Several  Distinct  and  Independent  Co- 
venants    492 

§  357.  When  Courts  Will  Regard  the  Provision  as  a  Penalty 493 

§  358.  Bond  Given  to  Promote  a  Public  Interest 495 

§  359.  When  Provision  Will  not  be  Considered  a  Penalty— Deposit 

Money 496 

§  360.  Provisions  for  Payment  in  Event  of  Delay 497 

§  361.  The  Measure  Provided  by  the  Contract  Controls 500 

§  362.  Waiver 500 

§  363.  Relief  in  Equity  from  Clause 501 

CHAPTER  L 

LIMITATIONS  TO   SUITS  ON   PUBLIC  CONTRACTS 

§  364.  Liability  of  Government  and  its  Sub-Divisions  to  Suit 502 

§  365,  Venue  of  Actions 503 

§  366.  Condition  Precedent  to  Suit— Necessity  to  Present  Notice  of 

Claim 503 

§  367.  Effect  of  Allowance  or  Rejection  of  Claim 505 

§  368.  Rights  and  Remedies  Available  to  Public  Bodies 506 

INDEX 507 


xxm 


TABLE  OF  CASES 


[  References  are  to  sections 


Abbott  V.  Doane,  97 

V.  Hayes  County,  101 

Abells   V.    Syracuse,    216,    218,    219 
A.  Bryant  Co.  v.  New  York  Steam 

F.  Co.,  333 

Ackerman  v.  True,  71 

Ada  Co.  V.  BuUen  Bridge  Co.,       366 
Adams  v.  Brenan,  154 

V.  Essex  County,  114 

V.  Logan  County,  21 

Addis  V.  Pittsburgh,  142,  215 

Admiral  Realty  Co.  v.  New  York,    17 
Advertiser  Co.  v.  State,  291 

Aetna  Indemnity  Co.  v.  Waters, 

253,  265 
Aetna    Iron    Works    v.    Kossuth 

County,  281,  321 

Aetna  Life    Ins.    Co.    v.    Lyon 

County,  57 

Agawam    Nat'I    Bank    v.  South 

Hadley,  104 

Agnew  V.  Brail,  73 

Aiken  v.  Bloodgood,  231 

Akin  V.  U.  S.,  170 

Alameda  M.  Co.  v.  Pringle,  156 

Albany  v.  Hooker,  364 

V.  McNamara,  83,  84,  111 

Albany     City     Nat'I     Bank     v. 

Albany,  65 

Albin  V.  Comm.,  197 

Aldrich  v.  Tripp,  68 

Allamon  v.  Albany,  283 

Alleghany  County  v.  Parrish,  53 

Allen  V.  Davenport,  156 

V.  Jay,  37 

V.  Labsap,  154 

V.  Lafayette,  57,  59,  60,  77 

V.  Mekose,  214,  231,  235 

V.  Milwaukee,  128,  133 

V.  Portland,  156 

Alien  Co.  v.  Silver,  163 


Alpena  ex  rel.  Beaudrie  v.  Murray 

Co.,  331 

Alpena  ex  rel.  Besser  v.  Title  G.  &. 

T.  Co.,  331 

Alpena  ex  rel.  O'Brien  v.  Title  G. 

&  S.  Co.,  331 

Alpena,  use  of  Gilchrist  v.  Title 

G.  &.  T.  Co.,  331 

Alpena,  use  of  Zess  v.  Title  G.  &. 

T.  Co.,  345 

Alpers  V.  San  Francisco,  69 

Altgelt  V.  San  Antonio,  68,  70 

Alton  V.  lUinois  T.  Co.,     76,  170,  183 

V.  Mulledy,  111 

American  Bond  Co.  v.  Ottumwa,  185 
American  Bond  &  T.  Co.  v.  Gibson 

County,  259 

American    Lighting    Co.  v. 

McCuen  142 

American   Malleables  Co.  v. 

Bloomfield,  44 

American  Pav.  Co.  v.  Wagner,      147 
American  Radiator  Co.  v.  Amer. 

Bond  Co.,  325 

American  Surety  Co.  v.  Bd.  of 

Waseca  Co.,  339,  340 

V.  Lauber,  325 

V.   Lawrenceville  Cement 
Co.,  332 

V.  Raeder,  336 

American  Water  Softener  Co.  v. 

United  States,  90 

Amoskeag    Mfg.   Co.    v.   United 

States,  283 

Ampt.  V.  Cincinnati,  114 

Amsterdam  v.  Sullivan,   246,  249 

263,  299 
Anderson,  Matter  of ,  113 

Anderson  v.  Bd.,  etc.,  St.  Louis 

P.  S.,  88,  143,  147 

V.  Fuller,  52,  121,  154 

Andrews  v.  Ada  County,  113 

V.  South  Haven,  30,  68,  80 


XXV 


TABLE    OF    CASES 


[  References  are  to  sections 


Anglesea  v.  Rugsley,  290 

Anne  Arundel  Co.  v.  Duckett,       364 
Appleton  W.  Wks.  Co.  v.  Apple- 
ton,  11,  83 
Archer  v.  Franklin  County,    216,  238 
Argenti  v.  San  Francisco,  59,  60, 

61,  64,  88,   102,   104,   105,   107 
Argentine  v.  Atchison  T.  &  S.  F. 

R.  Co.,  45 

Argus  V.  .\lbany,     84,  136,  144,  206 
Arg^le  V.  Plunkett,  326,  334,336 

Arlington  v.  Calhoun,  365 

Armour  P.  Co.  t'.  United  States,   191 
Arnott  I'.  Spokane,  138 

Ash  I'.  Independence,  158 

Asher  V.  Hutchinson  W.  &  L.  P. 

Co.,  68 

Atcheson  v.  Hutchison,  186 

V.  MaUon,  100 

Athearn  v.  Ind.  Sch.  Dist.,  136 

Atkin  V.  Kansas,  154 

I'.  Wyandotte  Coal  &  L.  Co.,  128 

Atkins  V.  Van  Buren  Sch.  Tp.,        96 

Atkinson  v.  Bd.  of  Commrs.,  38 

I'.  Davenport,  301 

Atlanta  t'.  Stein,  153 

Atlantic   City   v.  Ass'd   Realties 

Corp.,  47 

V.  Atlantic  City  Steel  Pier 

Co.,  47 

V.  Warren  Bros.,  97 

Atlantic  City  W.  Wks.  v.  Con- 
sumers Water  Co.,  70 
Atlantic  Gas  &  W.  Co.  v.  Atlantic 

City,  131 

Attorney-General  v.  Detroit,     29,  30 

V.  Eau  Claire,  37 

V.  Leicester,  32 

V.  Lowell,  4 

Augusta  V.  McKibben,  114 

Aurora  W.  Co.  v.  Aurora,  84 

Austin  V.  McCall,  56 

V.  Supervisors,  89 

V.  XaUe,  6 

B 

Bacas  v.  Alder,  156 

Bachelder  v.  Epping,  79 

Bader  v.  New  York,      247,  270,  309 


Badger     Mfg.     Co.     v.     United 

States,  244 

Bailey  v.  Philadelphia,  73 

Baily  v.  Philadelphia,  30 

Baird  v.  New  York,  83  N.  Y.  254,  120 
V.  New  York,  96  N.  Y.  567, 
90,  98,   102,  115,  121,   133 
Baker  v.  Bryan,  325 

V.  Grand  Rapids,  32 

V.  Johnson  County,  89 

Balch  V.  Beach,  53 

Baldwin  v.  Comm.,  84 

Ball  Eng.  Co.  t;.  White,  322 

Baltimore  v.  Ault,  251,  265,  360 

V.  Flack,  113,  128 

V.  Hughes,  111 

V.  Kinlein,  273 

V.  Musgrave,  11 

V.  Poultney,  111 

V.  RajTno,  283 

V.  Reynolds,  11,  12 

V.  Schaub  Bros.,  265 

Bancroft  v.  Lynnfield,  42,  43 

Bank  of  Commerce  v.  Louisville,     16 
Bank  of  Harlem  v.  Bayonne,  209 

Bank  of  Rome  v.  Rome,  15 

Barber  A.  P.  Co.  v.  French,  156 

V.  Gaar,  113 

V.  Hezel,  156 

V.  New  York,  115 

V.  St.  Paul,  136  Minn.  396,     359 
224  Fed.  842,       193 
V.  Trenton,  147 

V.  Ullman,  156 

V.  WiUcox,  115 

Bardwell  v.  South  Engine  Wks.,      60 
Barlow  v.  Jones,  119 

V.  United   States,   153,   222, 

259,  263 
Barnert  v.  Paterson,  74,  111 

Barnum  v.  Baltimore,  47 

Barrett    Mfg.     Co.    v.    Bd.     of 

Commr's.,  346 

Barry  v.  Capen,  49,  55 

V.  New  York,  189 

V.  United  States,  315 

Bartlett  v.  Lowell,     11,  60,  108,  248 

V.  Stanchfield,  218 

Bass  F.  &.   M.  Works  v.  Parke 

County,  53,  150 


XXVI 


TABLE   OF   CASES 


[  References  are  to  sections  ] 


Bates  V.  Bassett,  29,  30,  40 

Baum  V.  Whatcom  County,  336 

Baxter  Springs  v.  Baxter  Springs 

L.  &  P.  Co.,  70,  138 

Bay  V.  Davidson,  90,  99 

Bayley  v.  Anderson,  322 

Bayne  v.  United  States,  93  U.  S. 
642,  67 

V.   United  States,    195  Fed. 
236,  174 

Beach  v.  Haynes,  76 

V.  United  States,  83,  84 

Beals  V.  Fidelity  &  D.  Co.,  331 

Bean  v.  Jay,  164 

Beattie  v.  McMullen,  80  Conn. 
160,  186,  189,  220,  222 

V.  McMullen,  82  Conn.  484, 

212,  214,  240,  263 
V.  N.  Y.  etc.  Cons.  Co.,  313 

Beaver  v.  Trustees,  118 

Beaver  Eng.  &  Cont.  Co.  v.  New 

York,  193 

Becker  v.  New  York,  53  App,  Div. 

301,  170  N.  Y.  219,  211 

V.  New  York,  77  App.  Div. 

635,  176  N.  Y.  441,   163, 

211,   214,   215,   223,   230, 

254,  255 
V.  PhUadelphia,  245,  246 

V.  Churdan,  175,  176 

Beckwith  v.  New  York,  121  N.  Y. 
App.  Div.  462,    123, 143, 145, 

147,  307,  313 
V.  New  York,  148  App.  Div. 
658,  113,  189,  255 

Beers  v.  Dalles  City,  138 

Beinhauer  v.  Gleason,  223 

Belfast  V.  Belfast  Water  Co.,  59 

BeU  V.  Boston,  204 

V.  Kirkland,    56,  58,  61,  327,  331 
Belser  v.  AUman,  114 

Bennett  v.  Emmettsburg,  113 

V.  Mt.  Vernon,  5 

Benson  v.  Bawden,  20 

Bentley  v.  Davidson,  216 

V.  State,  159,  287,  293 

Berka  v.  Woodward,     90,  99, 108,  367 
Berlin   Iron  B.   Co.   v.   San  An- 
tonio, 108 
Bernstein  v.  New  York,  164 


Berry  v.  Tacoma,  147 

Bethany  v.  Howard,  340 

Biddeford  v.  Yates,  40 

Bietry  v.  New  Orleans,  243,  249 

Bigby  V.  United  States,  83,  110 

Bigelow  V.  Perth  Amboy,  368 

Bigler  v.  New  York,  5  Abb.  N.  C. 

51,  108 

Bigler  v.  New  York,  9  Hun.  253,  281 
Binninger  v.  New  York,  185 

Birdsall  v.  Clark,  4 

Bissell  V.  Kankakee,  37 

Bitting  V.  U.  S.,  283 

Black  V.  Detroit,  5,  11 

Blackburn  v.  Reilly,  306 

Blair  v.  Chicago,  206 

V.  Waco,  4 

Blake  v.  Macon,  46 

Blanchard  v.  Blackstone,  92 

V.  Burns,  345 

Blank  v.  Kearny,  128,  132 

Blochman  v.  Spreckels,  153,  155 

Blodgett,  Matter  of,  153 

Bloomsburg    Land    Imp.    Co.    v. 

Bloomsburg,  32 

Bluffton  V.  MUler,  4 

Bluthenthal  v.  Headland,  52,61, 

107 
Board    of    Educ.    Bath    Tp.    v. 

Townsend,  292,  293 

Bodewig  v.  Pt.  Huron,  110 

Boesen  v.  Potter  County,  205 

Bohn  V.  McCarthy,  336 

Bohnen  v.  Metz,  153 

Boise   City   v.   National    Surety 

Co.,  272 

V.  Randall,  74 

Boiler  V.  New  York,  207 

Bond  V.  Newark,  254 

Bonesteel   v.   Mayor,     163,   215, 

254,  272,  281,  287,  300,  311 
Boonton  v.  United  W.  S.  Co.,  95 
Boren  v.  Commrs.  Darke  County, 

118,  147,  148 
Borough  Cons.  Co.  v.  New  York, 

213,  230,  231,  255,  259,  269 
Boseker  v.  Wabash  Co.,  330 

Boston  V.  Dist.  of  Columbia,  111 

Boston  Elec.  Co.  v.  Cambridge, 

6,  108,  111,  138,  215,  21S 


XXVll 


TABLE   OF   CASES 


References  are  to  sections  ] 


Bosworth-Chanute  Co.  v.  Bright- 
on, 17,  91 
Bounds  V.  Hubbard  City,  193 
Bowe  V.  U.  S.,                        238,  255 
Bowers  Hydr.  Dredg.  Co.  v.  U.  S., 

170,  176,  193,  263 
Bowery  Nat.  Bank  v.  Mayor,  261,  270 
Boyd  I'.  Black  Sch.  Tp.,  18 

V.  Milwaukee,  156 

Brabazon  v.  Seymour,  167,  223 

Brace  v.  Gloversville,  209 

Braden  f.  U.  S.,  212,  218,  249 

Bradley  v.  McDonald,  163,  165, 

197,  261,  270,  317 
V.  United  States,  5,  146 

V.  Van  Wyck,  147 

Bradshaw  v.  Jamestown,  156 

Brady  v.  Bayonne,  45 

V.  Brooklyn,  72 

V.  Mayor,  11,  151,  223,  261, 

264,  300 
V.  New  York,  20  N.  Y.  312, 

108,  113 

V.  New  York,  112  N.  Y.  480,  130 

Brawley  I'.  U.  S.,  179,  184 

Bray  v.  V.  S.,  194,  252,  263 

Brenham  v.  Brenham  W.  Co.,  10 

V.  German  Amer.  Bank,  45 

Brewster  v.  Homellsville,  209 

t'.  Kitchin,  290 

V.  Syracuse,  42 

Brick     Pres.     Church     v.     New 

York,  9,  290 

Bridgeport  v.  Aetna  Indem. 

Co.,  246,  304,  307,  317 

i^.  Scott  Co.,  199 

Briggs  V.  Whipple,  42 

Briscoe  v.  Allison,  57 

Broad,  Re.,  153 

Brogan  v.  National  Surety  Co.,      332 
Bromagin  v.  Bloomington,  119 

Brooke  v.  Philadelphia,  45 

Brooklyn   v.    Brooklyn   City   R. 

R.  Co.,  203,  250 

Brookl>Ti  Central  R.  Co.  v.  Brook- 
lyn C.  R.  Co.,  80 
Brooklyn  City  R.  Co.  v.  Whalen, 

1,  25,  29,  30,  31,  107 
Brooklyn  Heights  R.  R.  Co.  v. 
Steers,  71 


Brooklyn  Park  Commrs.  v.  Arm- 
strong, 76 
Brooklyn,  Re.,                        6,  68,  80 
Brooks  V.  Brooklyn,     39,  40,  57,  58 
V.  Wichita,                               358 
Brown  v.  Atchison,                    59,  63 
V.  Baton  Rouge,                      259 
V.  Board  of  Educ.  of  Pomona,  90 
V.  Brown,  49 
V.  Houston,                              122 
V.  Jenks,                                     156 
V.  Mayor,  42 
V.  Salt  Lake  City,  68 
Browne  v.  United  States,               293 
Brush    Elec.    L.    Co.    v.    Mont- 
gomery,                                   102 
Bryan  v.  Page,                                108 
V.  Reynolds,  48 
Bryant  Co.  v.  New  York  Steam 

Fitting  Co.,  333 

Buchanan  v.  Litchfield,  108 

Buckland  v.  Conway,  72 

Buckley  v.  Marin  County,  281 

Bucksport  &  B.  R.  Co.  v.  Brewer, 

204 
Buffalo  V.  Balcom,  59 

V.  Bettinger,  368 

Buffalo  Cement  Co.  v.  McNaugh- 

ton,        120,  334,  336,  337,  368 
Bull  V.  Talcott,  87 

BuUard  v.  Shirley,  47 

Burchfield  v.  New  Orleans,  11 

Burck  V.  Taylor,  151,  209 

Burke  v.  ChUd,  48,  49 

V.  Mayor,  209,  263,  266 

Burkhardt  v.  Georgia  Sch.  Tp.,     291 
Burnett  v.  Jersey  City,  151,  209 

Burnham  v.  Milwaukee,  176,  180, 

213,  237,  240 
Burns  v.  New  York,  212,  265,  319 
Burrill  v.  Boston,  108 

Burroughs  v.  Sch.  Dist.,  193 

Burton  v.  Larkin,  336 

Burton  v.  United  States,   92,  136, 

172 
Bush  V.  Bd.  of  Super's,  42 

V.  O'Brien,  16,  73 

Butte  Water  Co.  v.  Butte,     171,  193 
Buttrick  ?;.  Lowell,  74,  110 

Bye  V.  Atlantic  City,  128 


XXVUl 


TABLE   OF   CASES 


References  axe  to  sections  ] 


Cadenasso  v.  Antonelle,  331 

Caesar  v.  Rubinson,  354 

Cahill  I'.  Bd.  of  State  Auditors,  74 
Cahn  ;;.  Metz,  129 

Caldwell    v.    School    Dist.    Lake 

County,  96 

Caldwell  et  al.  v.  Pierce,  263 

California  Imp.  Co.  v.  Moran,  114 
Call  Pub.  Co.  V.  Lincoln,  108 

Callahan  Cons.  Co.  v.  United 
States,  47  Ct.  CI.  177,  196 

V.  United  States,  47  Ct.  CI, 

229,  222,  231,  255,  283 
Camden  v.  Ward,  321 

Camden  L  Wks.  v.  New  Orleans 
Sew.  Bd.,  362 

V.  New  York,  285 

Cameron-Hawn  Realty  Co.  i'. 
Albany,     192,  289,  292,  293, 

295,  298 
Campau  v.  Detroit,  163 

Canal  Company  v.  Gordon,  302 

Canavan  v.  Mechanicsville,  68 

Cansler  v.  Penland,  54 

Capital  City  B.  &  P.  Co.  v.  Des 
Moines,  136  Iowa,  243;  113 
N.  W.  835,   3,  158,  177,  196, 

216,  226,  227,  240 
V.  Des   Moines,  127   N.  W. 
(Iowa),  66,  301 

Capital  Print  Co.  v.  Hoey,  147 

Carey  v.  East  Saginaw,  61,  138 

Garland  v.  New  Orleans,  247,  283 
Garlin  v.  New  York,  272,  311,  313 
GarlyleW.&L.P.Co.v.Carlyle,  53 
Carnegie    Steel    Co.    v.    United 

States,  349 

Carpenter  v.  Furrey,  324 

V.  Mather,  20 

V.  Yeadon  Borough,  5 

Garr  v.  State,  364 

Carranza  v.  Hicks,  99 

Carroll  County  Bd.  of  Comrs.  v. 

O'Connor,  227,  231,  287 

Carson  v.  Dawson,  167,  216,  220 
Carter  v.  Dubuque,  44,  46 

Carthage  T.  P.  Mills  v.  Car- 
thage, 183,  193 


Casady  v.  Woodbury  County,         55 
Casgrain  v.  Milwaukee,  210 

Cashen  v.  Sch.  Dist.  291 

Cashman  v.  Boston,  216 

Cason  V.  Lebanon,  154 

Cathell  V.  U.  S.,  145 

Cavanagh  v.  Boston,  110 

Caverly    Gould    Co.    v.    Spring- 
field, 192 
Cayuga  Co.  v.  State,  153  N.  Y. 
279,  42 
V.  State,  183  N.  Y.  S.  646,      364 
Central  Bitulithic  Pav.  Co.  v.  Mt. 
Clemens,                           189,  301 
V.  Highland  Park,             93,  138 
Central  Branch  Un.  Pac.  R.  Co. 

V.  Smith,  37 

Chamberlain  v.  Burlington,  45 

Chambers  v.  Cameron  Bd.  of  Ed.,  166 
V.  St.  Louis,  47 

Chance  v.  Bd.  of  Gomm'rs  Clay 
County,  248 

V.  Portland,  300 

Chandley  v.  Cambridge  Springs, 
200  Pa.  230,  252 

V.    Cambridge   Springs,    203 
Pa.  139,  283 

Chapin  v.  Pike,  208 

Chapman    v,    Douglas    County, 

59,  60,  61 
V.  Lincoln,  40 

V.  Lowell,  250 

V.  Montgomery  W.  P.  Co.,     293 
V.  New  York,  42,  43,  45 

V.  State,  364 

Charlotte    v.  Atlantic   Bitulithic 

Co.,  368 

Chase  v.  Scheerer,  4 

V.  United  States,  10 

Chase-Hibbard  M.  Co.  v.  Elmira,     7 

Cheeny  v.  Brookfield,  11 

Chesebrough  v.  Conover,  49 

Chicago  V.  Agnew,  340 

V.  Berger,  146 

V.  Chicago  Union  Trac.  Co.,       9 

V.  Duffy,  179  111.  447,  237 

218  lU.  242,     223,  228 

V.  Handreddy,  121,  150 

V.  Hulbert,  154 

V.  Hunt,  207 


XXIX 


TABLE   OF   CASES 


References  are  to  sections  ] 


Chicago  V.  McDonald,  57 

r.  McKechney,         59,  163,  236 
r.  Mohr,  lis,  119 

V.  RumpfF,  70 

V.  Sexton,  7,  108,  199,  200,  361 
V.  Sheldon,  193 

V.  TiUey,  307 

r.  Weir,  67,  181 

V.  Williams,  74 

Chicago  &  N.  W.  R.  Co.  v.  Lang- 
lade Co.,  57 
Chicago  B.  &.  I.  Co.  v.  Olson,  283 
Chicago  B.  &  R.  Co.  v.  Quincy,  9 
Chicago  Flour  Co.  v.  Chicago,  170 
Chicago  House- Wrecking  Co.  v. 

United  States,  354 

Chicago  San.  Dist.  v.  McMahon 

&  Co.,  150 

Chickasha  v.  Hollingsworth,  283 

Child  I'.  U.  S.,  132 

Childs  V.  Columbia,  30,  68,  206 

Chillicothe  Bk.  v.  ChilUcothe,  77 

Chippewa  Bridge  Co.  v.  Durand, 

5,  52,  99,  114,  116,  142,  147 
Chouteau  v.  United  States,  237 

Christensen  v.  Fremont,  68 

Christian    County    v.    Overholt, 

302,  305 
Christie   v.   United   States,    195, 

196,  226 
Christy  v.  St.  Louis,  75 

Churchyard  v.  The  Queen,    170,  192 
V.  United  States,  283 

Cincinnati  v.  Cameron,  138,  216 

V.  Dexter,  38 

Citizens  Bank  v.  Spencer,     11, 18, 

53,  108 
V.  Terrell,  57 

Citizens  Elec.   L.   &   P.   Co.   v. 

Sands,  68,  80 

Citizens  Water  Co.  v.  Bridgeport 

Hyd.  Co.,  68,  80 

City  Street  Improvement  Co.  v. 

Laird,  135 

V.  Marysville,  153,  155,  263 

City  Trust  Co.  v.  U.  S.,  332 

Clamp,  Re,  116 

Clark  V.  Barnard,  358 

V.  Bd.  of  Commrs.  of  Osage 

County,  272 


Clark  V.  Des  Moines,  367 

V.  Mayor,      160,     163,    231, 

272,  298,  307,  311,  313 
V.  New  York,  246 

V.  Pittsburgh,     161,  259,  265, 

268,  269,  270,  360 
V.  Pope,  270 

V.  Portsmouth,  146 

V.  Saline  County,  60 

V.  Sch.  Dist.,  310 

V.  State,  154 

V.  United  States,  3  Ct.  CI. 

451,  246 

V.  United  States,  95  U.  S., 
539,  102,  137 

Clark  &  Sons  Co.  v.  Pittsburg, 

129,  220,  252 
Clark  Co.  v.  Allegheny  City,  132 

Clarke  Cont.  Co.,  v.  New  York, 

203,  245,  246 
Cleveland  v.  Clement  Bros.  Cons. 
Co.,  153,  154 

V.  Connelly,  357 

V.  State  Bank,  76 

Cleveland  County  v.  Seawell,         111 
Cleveland  Sch.  F.  Co.  v.  Green- 
ville, 53 
Cleveland  Term'l,  etc.,  R.  Co.  v. 

State,  364 

Clinton  County  v.  Ramsey,  170 

Clough  V.  Hart,  74 

Coates  V.  Campbell,  37 

Cobum  V.  Hartford,  199 

Cochran  v.  Vermilion  Coimty,         182 
Cody  V.  New  York,  243,  314 

Coggeshall  i'.  Des  Moines,  113 

Cogwin  V.  Town  of  Hancock,  15 

Coit  V.  Grand  Rapids,  3,  56 

Coker   v.  Atlanta   K.   &  N.   R. 

Co.,  64 

Cole  V.  LeGrange,  37 

V.  People,  156 

V.  Seattle,  366 

V.  State,  42 

Coleman  v.  Broad  River  Tp.,  45 

V.  United  States,  111 

Collins  V.  Spokane,  366 

V.  United  States,     167,  214,  241 

Colorado  Paving  Co.  v.  Murphy, 

88,  147,  149 


XXX 


TABLE   OF   CASES 


[  References  are  to  sections 


Columbus  Gas  Light,  etc.,  Co.  v. 

Columbus,  9 

Columbus  Water  Co.  v.  Colum- 
bus, 10,  53,  59,  70,  206 
Colusa  County  v.  Welch,  100 
Comanche  v.  Hoff  and  Harris,       203 
Combs  V.  Jackson,                  331,  335 
Commercial  Wharf  Corp.  v.  Bos- 
ton,                                   106,  110 
Commissioners  v.   Cincinnati   S. 
H.  Co.,  165 
V.  Galbraith,                    215,  216 
V.  Gibson,  193 
V.  Harrison,  111 
V.  Hunt,  21 
V.  Speer,                                     242 
Commissioners,    Bd.    of    School 

V.  Bender,  119 

Commonwealth  t'.  Cambridge,        22 
V.  Grant,  182 

V.  Mc Williams,  37 

V.  Mitchel,  149 

Commonwealth    Water    Co.     v. 

Castleton,  366 

Concord  v.  Boscawen,  79 

Condon  v.  Jersey  City,  216 

Conlin  v.  San  Francisco,  42 

Conn  V.  State,  340 

Conners  v.  U.  S.,  163,  212,  223 

Connersville  v.  Merrill,  113,  114 

Connor  R.  Co.  v.  Aetna  Indem. 

Co.,  325 

Continental     Securities     Co.     v. 

Belmont,  248 

Converse    Br.    Co.    v.    Geneva 

County,  287 

Conway  v.  Chicago,  159,  173,  174 
Cook  V.  Burlington,  76 

Cook  County  v.  Harms,     166, 167, 

236,  254 
Cooke  V.  United  States,  82 

Cooley  V.  Granville,  79 

Coolidge  V.  Brookline,  79 

Coonan  v.  Cape  Girardeau,  293 

Cooper  V.  United  States,  213,  231 
Cornell  v.  Schuylkill  County,  284 
Corrigan  Transp.  Co.  v.  Sanitary 

Dist.,  197 

Coryell  v.  Dubois  Borough,  210 

Costa  V.  Cranford,  212 


Coster  V.  Mayor, 

197 

Cotriss  V.  Medina, 

366 

Cotter  V.  Castell, 

142 

Cotton  V.  U.  S., 

283 

Couch  V.  State, 

84 

County  V.  Katz-Craig  Cont. 

Co.,  194 

Covington  v.  So.  Covington  &  C. 

S.  R.  Co.,  170,  193 

V.  So.  Covington  St.  Ry.  Co.,  206 
Crab  Creek  Lumber  Co.  v.  Othello, 

346 
Cramp   &    Sons   Co.   v.   United 

States,  293 

Cramp  &  Sons  Ship  Co.  v.  Inter- 

nat.  Curtis  Turbine  Co.,         109 
Crane  Co.  v.  U.  S.,  348 

Cranford  v.  Dist.  of  Columbia,      281 
Cranford     Co.     v.     New     York, 

302,  311,  313 
Crawfordsville  v.  Braden,  1,  2,  3, 

7,  30,  68 
Crebs  v.  Lebanon,  164 

Creighton  v.  Toledo,  83 

Creston  Water  Wks.  v.  Creston,        5 
Crichfield  v.  Bermudez  A.  P.  Co., 

49,  54,  55,  100 
Crocker  v.  Buffalo,  212 

V.  United  States,  240  U.  S. 
74,  100,  245,  249 

V.  United  States,  21  Ct.  CI. 
255,  192 

Crocket  v.  Boston,  22 

Croton  Falls  Cons.  Co.  v.  New 

York,  266 

Crowder  v.  Sullivan,  114,  121 

Culbertson  v.  Fulton,  57 

Cullen  V.  Carthage,  43,  74 

Gulp  V.  New  York,  130 

Cumberland  Co.   Bd.  v.  Paxson 

Co.,  283 

Cunningham  v.  Cleveland,  3 

V.  Denver,  366 

Curran  Print'g  Co.  v.  St.  Louis, 

203,  204 
Currier  v.  United  States,  100 

Curtis  V.  Portsmouth,  84,  144 

V.  United  States,  146 

Curved    Electrotype    P.    Co.    of 

New  York  v.  U.  S.,  83 


XXXI 


TABLE   OF   CASES 


[  References  are  to  sections  ] 


D 


Dady  v.  New  York,  130,  132,  146 
Dad y,  Pec.  ex  rel,  v.  Pendergast,  42 
Daggett  V.  Colgan,  7,  30,  79 

Dale  V.  United  States,     213,  214, 

223,  287,  293 

Dailey  t'.  New  Haven,  47 

V.  New  York,  280,  313 

Dailv  V.  Litchfield,  356 

Dakota  Cen.  Tel.  Co.  v.  South 

Dakota,  7 

Dalton,  Re,  153 

Daly  V.  Carthage,  203,  204 

Damon  r.  Granby,  249 

Danolds  v.  State,     82,  148,  160, 

242,  291,  299,  307,  313 
Danville  i'.  Danville  W.  Co.,  9,  10 
Danville  Bridge  Co.  v.  Pomroy, 

256,  281 
Danville  W.  Co.  v.  Danville,  70 

Darling  t'.  Newport  News,  9 

Darragh  v.  United  States,  145 

Dausch  t'.  Crane,  82,  164 

Davenport  t'.  Buffington,  364 

Davenport  Gas  L.  Co.  v.  Daven- 
port, 164 
Davidson  v.  Gaskill,               272,  295 
V.  White  Plains,  15 
Davies  v.  East  Saginaw,        172,  212 
V.  New  York,  83  N.  Y.  207,    131 
93  N.  Y.  250,  11 
Davies  County  v.  Dickinson,            57 
Davin  v.  Syracuse,     170,  357, 359, 

361 
Davis  V.  Choctaw  County,  100 

V.  Commonwealth,       41,  49,  74 
V.  New  York,  9 

V.  Rockport,  76 

V.  State,  243 

V.  United  States,  17  Ct.  CI. 

201,  357 

V.  United  States,  23  Ct.  CI. 

329,  49 

Day  V.  U.  S.,  171 

Deal  I'.  Mississippi  County,  37 

Dean  v.  Charlton,  115 

V.  Mayor,  186,  189 

Decatur  v.  Jaudon,  197 

Decatur  G.  &.  C.  Co.  v.  Decatur,     53 


Deering  &  Co.  v.  Peterson,        37,  59 
Deer  Island  v.  Eaton,  111 

Deeves  v.  New  York,  283 

Defiance  W.  Co.  v.  Defiance,  10 

Delafield  v.  Illinois,  11,  12 

V.  Westfield,  113,  275,  283 

Delaney  v.  Salina,  47 

Delano  v.  Suffolk  Co.,  366 

Delavan  Ave.,  Matter  of,  7 

Delaware     County     v.     Diebold 

Safe  Co.  208 

Delaware,  L.  &.  W.  R.  Co.  v.  Os- 
wego, 3,  71 
Demarest  v.  Mayor,  8 
Deming  v.  United  States,                291 
Demoth  &  Rose  v.  Hillsboro  Indp. 

Sch.  Dist.,  287 

Denison  v.  Crawford,  49,  100 

Dennis  v.  U.  S.,  349,  361 

Denton  v.  Atchison,     126,  281,  287 
Denver  v.  Hallett,  35,  39 

V.  Hindry,  52,  325 

Denver   &  R.  G.  R.  R.   Co.  v. 

Denver,  9,  71 

Derby  v.  U.  S.  F.  &  G.  Co.,  344 

Dermott  v.  Jones,      195,  272,  292,  310 
Deshong  v.  New  York,  71 

Des   Moines  v.  Des  Moines   W. 

Wks.  Co.,  152 

Des  Moines  Gas  Co.  v.  Des 

Moines,  7,  70 

De  Soto  County  v.  Dickson,  182 

Detroit  v.  Detroit  City  R.  Co.,       57 

V.  Hosmer,  113,  114 

V.  Michigan  Pav.  Co.,  163 

Detroit  Bd.  of  Ed.  v.  Grant,     325, 

327,  328 
Detroit  Cits.  S.  R.  Co.  v.  Detroit, 

1,  70 

Detroit  United  Ry.  v.  Michigan,       9 

Detwiller  v.  Mayor,  133 

Devers  v.  Howard,  325,  336 

Devlin  v.   Mayor,   63   N.   Y.   8, 

208,  272,  291,  295,  298,  307,  311 

V.  Mavor,  4  Duer,  337,  237 

V.  New  York,  264,  302 

Devoy  v.  Craig,  7 

Dewey  v.  Alpena  Sch.  Dist.,  292,  293 

DeWolf  V.  People,  154 

Dialogue  v.  U.  S.,  214 


XXXU 


TABLE   OF   CASES 


[  References  axe  to  sections  ] 


Diamond  v.  Mankato,  128,  142 

Dickey  v.  Vaugn,  165 

Dickinson  v.  Boston,  106 

V.    Poughkeepsie,     11,     118, 

138,  142,  154 
Dickson  v.  St.  Paul,  209 

V.  United  States,  364 

Dillingham  v.  Spartanburg,  114 

DiUon  V.  Syracuse,  214 

Dillow  &  Co.  V.  Monticello,  176 

Dinsmore  v.  Livingston  County, 

152,  259 

Dishon  v.  Smith,  21 

Dist.  of  Columbia  v.  Bailey,  72 

V.  Bayly,  326,  343 

V.  Camden  I.  Wks.,  283 

V.  Clephane,  159,  185,  287 

V.  GaUaher,  193,  212 

V.  Harlan  &c.  Co.,  348,  362 

Dist.  Tp.  of  Union  v.  Smith,  292 

Dist.  Tp.  of  Walnut  v.  Rankin,       72 

Diver  v.  Keokuk  Sav.  Bank,  151,  153 

Dix  V.  Dummerston,  72 

Dixey  v.  Atlantic  City  &c.  Co.,      113 

Dixon  V.  Detroit,  300 

V.  Greene  County,  114 

Doane  v.  Chicago  City  R.  Co.,        50 

Dobson  V.  United  States,  150 

Dodge  V.  Mission  Tp.,  37 

Dodge  County  Commrs.  v. 

Chandler,  37 

Dodson  V.  McCumin,  49 

Doland  v.  Clark,  163,  164 

Doll  V.  Crume,  325,  336 

DoUoff  V.  Ayer,  111 

Domenico    v.     Alaska    Packer's 

Assn.,  97 

Donnable  v.  Harrisonburg,  30 

Donovan  v.  N.  Y.,  11,  108,  130 

Dooley  v.  U.  S.,  364 

Dougherty  v.  Norwood  Boro.,        166 
V.  United  States,  146 

Douglas  V.  City  Council  of  Green- 
ville, 7 
V.  Lowell,  106, 272, 298,  300,  310 
Douglass  V.  Mayor  of  Virginia 
City,  3 
V.  Montgomery,  76 
V.  Morrisville,     84   Vt.   302, 

265,  270 


Douglass  V.  Morrisville,  89    Vt. 

393,  171,  193,  194,  218 

Dowling  V.  Seattle,  344 

Doyle  V.  People,  154 

Drainage  Commrs.  v.  Lewis,  61 

Draper  v.  Springport,  17 

Drew  V.  Davis,  79 

Drhew  v.  Altoona,     5,  146,  152,  265 
DriscoU  V.  United  States,  213 

Dubuque  Elec.  Co.  v.  Dubuque,         9 
Duby  V.  Jackson,  331,  335 

Duffy  V.  Saginaw,  114 

Dugan  V.  United  States,  364 

Dugro,  Re,  102,  115,  133 

Dulaney  v.  Scudder,  209 

Duluth  V.  McDonnell,  216 

Duncan  v.  Cordley,  195 

V.  Miami  County,  212,  216 

Duncombe  v.  Ft.  Dodge,  166 

Dunlap  V.  Erie  Water  Commrs.,     136 
Dunn  V.  New  York,  113,  189 

Dunning   v.   County  of   Orange, 

174,  254 
DuPont   DeNemours   P.   Co.   v. 

Culgin-Pace  Cont.  Co.,  331,  336 
Duryea  v.  Mayor,  183 

Dwyer  v.  Bd.  of  Education,  259 

V.  New  York,     159,  218,  220, 

223,  230,  231,  287 
Dyer  v.  Middle  Kittitas  I.  Dist., 

25  Wash.  80,  165,  302,  309 

V.     Middle     Kittitas     Irrig. 

Dist.,  40  Wash.  238,       265,  322 

V.  Newport,  68 

E 

Eastern  111.  St.  Normal  Sch.  v. 
Charleston,  68 

Eastern  Steel  Co.  v.  Globe  Indem. 
Co.,  334,  336 

Easthampton  v.  Vail,  194 

East  Ohio  Gas  Co.  v.  Akron,  170,  192 

East  River  G.  L.  Co.  v.  Don- 
nelly, 14,  122,  149 

East  St.  Louis  v.  East  St.  Louis 
G.  L.  Co.,  53,  59,  108 

East  St.  Louis  G.  L.  Co.  v.  East 
St.  Louis,  242,  249 

East  Tenn.  Univ.  v.  Knoxville,         1 


xxxm 


TABLE   OF   CASES 


References  are  to  sections 


Eaton  V.  Joint  Sch.  Dist.,  293 

Ecroyd  v.  Coggeshall,  11 

Eddy  V.  Granger,  9 

Edgar  c.  United  States,  357 

Edge  Moor  Bridge  Wks.  v.  Bristol 

County,  88,  112 

Edison  Elec.  Co.  v.  Pasadena,       108 
Edwards  v.  Berlin,  135 

V.  Goldsboro,         9,  20,  21,  100 
V.  Randle,  55 

Eigemann  v.  Posey  County,  207,  214 
Eldred  i-.  New  York,  365 

Elec.  Appliance  Co.  v.  U.  S.  F.  & 

G.  Co.,  336,  337,  342 

Elec.  L.,  etc.,  P.  Co.  v.  San  Bern- 
ardino, 131 
Elgin  V.  Joslyn,    207,  218,  231, 

236,  308,  312 
Elizabeth  v.  Fitzgerald,  261,  281 
Elkhart  County  Lodge  v.  Crary, 

48,  49 
EUicott  Machine  Co.  v.  United 

States,  357,  361 

Ellinwood  v.  Reedsburg,  68 

Elliot  V.  Minneapolis,    121,  127,  143 
Elliott  V.  Wilkinson,  322 

Ellis  I'.  Witmer,  114 

Ellsworth  V.  Rossiter,  61 

Ely  V.  Grand  Rapids,  129,  163 

Elyria  v.  Cleveland,  etc.,  R.  Co.,     356 
Emery  v.  Branford,  300 

Emigrant  Co.  v.  County  of  Adams,203 
Emmert  v.  DeLong,  10 

Empire  State  Surety  Co.  v.  Des 

Moines,  331,  340,  342 

Englewood  v.  Denver  &  S.  R.  Co.,      9 
English  V.  Shelby,  170,  178,  179 

Episcopo  V.  Mayor,  209 

Equit.   Loan  &  Security  Co.   v. 

Eklwardsville,  35 

Equit.  Trust  Co.  v.  Hamilton,       367 
Erickson  v.  United  States,     178, 

212,  283 
Erie  R.  R.  Co.  v.  Buffalo,  280 

Ernst  V.  Kunkle,  208 

Ertle  V.  Leary,  113 

Erving  v.  Mayor,     120,  121,  122, 

123,  143,  147,  162,  175 
ErwMn  V.  United  States,  209 

Esberg  Cigar  Co.  v.  Portland,         68 


Escambia  County  v.  Blount 

Const.  Co.,  114,  129,  131 

Ettor  V.  Tacoma,  191 

Eufala  V.  McNab,  37 

Eugene,  v.  Chambers  P.  Co.,  91,  100 
Evans  v.  Middlesex  County, 

251,  263,  265 

V.  United  States,  197 

Everard  v.  Mayor,  263 

Ewen  V.  Thompson  Starrett  Co.,  153 

Excelsior  P.  Co.  v.  Leach,  156 


Faber  v.  New  York,     195,    196, 

226,  259,  269 
Fairbanks  Morse  &  Co.  v.  North 

Bend,     114,  118,  119,  120,  142 
Fairplay  Sch.  Tp.  v.  O'Neil,  96 

Faist  V.  Hoboken,  147 

Fallbrook  Irrig.  Dist.  v.  Bradley,     37 
Farmville  v.  Walker,  25,  35 

Farnham  v.  United  States  109 

Farnsworth  v.  Wilbur,  73 

Farrel  v.  Derby,  49,  74,  79 

V.  Coatesville,  11 

V.  County  of  Greenlee,  95 

Farrelly  v.  United  States,     301, 

302,  316 
Farwell  v.  Seattle,  5,  30,  68 

Fawcett  v.  Mt.  Au-y,  3,  7,  68 

Federal  Cont.  Co.  v.  Coal  Cr.  D. 

&  L.  Dist.,  255 

Federal  Mfg.  &  P.  Co.  v.  U.  S.,     209 
Fehler  v.  Gosnell,  156 

Feldman  v.  Charleston,  37 

Fellows  V.  Dorsey,  176,  194 

Ferber  Con.  Co.  v.  Bd.  of  Ed.  of 

Hasbrouck  Heights,  357 

Fergus    Falls    v.    Fergus    Falls 

Hotel  Co.,  59 

Ferguson  Cont.  Co.  v.  State  of 

N.  Y.,  192,  193 

Ferrari  v.  Escambi  County,  247 

Ferris  v.  United  States,  215,  313 

Fidelity  &  D.  Co.  v.  Hegewald 

Co.,  331 

Fidelity  Nat.  Bank  v.  Rundle,       332 
Field  V.  Barber  A.  P.  Co.,  128 

V.  Mayor,  208 


XXXIV 


TABLE   OF   CASES 


[  References  are  to  sections 


Fifth   Ave.   Coach   Co.    v.    New 

York,  71 

Figh  V.  U.  S.,  283 

Filbert !;.  Philadelphia,     159,  163, 

164,  281 
Findlay  v.  Pendleton,  146 

Finley  v.  Sch.  Dist.,  174 

Finucane   Co.   v.   Rochester  Bd. 

of  Educ,  165,  167,  223 

Fire  Ext.  Mfg.  Co.  v.  Perry,  146 

First  Const.  Co.  v.  State,  80 

First  Nat.   Bank  v.  City  Trust 

Co.,  344 

V.  Goodhue,  61,  108 

V.  O'Neil  Eng.  Co.,  344 

V.  Pesha,  344 

V.  Sch.  Dist.,  344 

V.  Syracuse,  233 

Fiscal  Ct.  V.  Ky.  Public  Service 

Co.,  358 

Fishburn  v.  Chicago,  128 

Fiske  V.  People,  154 

V.  Worcester,  5,  108 

Fitton  V.  Hamilton  City,  136 

Fitzgerald  v.  McClay,  336 

Fitzgerald  v.  Walker,  164 

Fleming  Mfg.  Co.  v.  Franklin,       143 
Jletcher  v.  Peck,  7 

Florence  Gas,  etc.,  Co,  v.  Hanby,  247 
Floyd    Acceptances,     (Pierce    v. 

U.  S.),  5,  11 

Floyd  County  v.  Allen,  11 

V.  Owego  Bridge  Co.,  108 

Foard  County  v.  Sandifer,  174 

Fonder  v.  United  States,  195 

Fones  Bros.  Hdw.  Co.  v.  Erb,        113 

Fontano  v.  Robbins,  269 

Ford  V.  Great  Falls,  128 

V.  North  Des  Moines,  22 

V.  United  States,  145,  213 

Forehand  v.  United  States,  111 

Fort  Dodge  Elec.  L.  &  P.  Co.  v. 

Fort  Dodge,  56,  57 

Fort  Edward  v.  Fish,    3,  11,  12, 

67,  107,  110 
Fort  Madison  v.  Moore,     84,  138, 

140,  165 
Fort   Scott   V.    Eads    Brokerage 

Co.,  108 

Fort  Smith  v.  Hunt,  9 


Fort  Wayne  v.  Lake  Shore  &  M. 

S.  R.  Co.,  76 

Fort  Worth  v.  Reynolds,  99 

Fortunato  v.  Patten,  151,  208,  209 
Fosdick  V.  Hempstead,  47 

Fosmire  v.  National  Surety  Co., 

334,  336 
Foster  v.  Boston,  89 

V.  Cape  May,  4 

V.  Worthington,  247 

Fostoria  v.  Fox,  365 

Fouke  V.  Jackson  County,  111 

Fountain  v.  Sacramento,  110 

Fowler  v.  United  States,  45 

Fox  V.  New  Orleans,  52 

Francis  v.  United  States,  209 

Fransiolo  v.  Thompson,  346 

Frasch  v.  New  Ulra,  366 

Freeman  v.  Chanute,  346 

Freeport     W.    Co.    t^.     Freeport 

City,  70 

French  v.  Millville,  45 

V.  Powell,  331,  347 

Friedman  v.  Hampden  County,  331 
Friedenstein  v.  United  States,  11,  303 
Friend  v.  Gilbert,  42 

Frost  V.  Belmont,  79 

Fuller  V.  Dame,  48 

V.  Groton,  42,  43 

FuUerton  v.  Des  Moines,  210 

Fulton    County   v.   Gibson,  212, 

231,  252,  269 

G 

Gage  V.  New  York,  113,  116,  160 

Gale  V.  Kalamazoo,  7,  9,  10,  70 

Galena  v.  Corwith,  2,  3,  77 

Gallagher  v.  Baird,  360 

Gallo  V.  New  York,  243 

Galpin  v.  Chicago,  101 

Galveston  v.  Devlin,  157,  239 

V.  Heard,        ■  153 

V.  Morton,  164 

Gamewell    Fire    Alarm    Co.    v. 

Mayor,  366 

V.  LaPorte,  57,  173 

V.  Los  Angeles,  130 

Gammino  v.  Dedham,  259,  265,  360 

Gardiner  v.  Bluffton,  7 


XXXV 


TABLE   OF   CASES 


References  are  to  sections  ] 


Gardner  v.  Hartford,  89 

V.  Cameron,  86,  192,  298 

Garfielde  v.  U.  S.,     85,  88,  136,  361 
Gartner  v.  Detroit,  212 

Gastonia    v.    McEntee    &    Co., 

325,  336,  344 
Gathwright  v.  Galloway  Co.,  292 
Gaynor  v.  Portchester,  42 

Gearing  v.  United  States,  259 

Gearty  i'.  Mayor,     223,  230,  231, 

239,  250,  255,  259,  266,  269 
Geary  v.  New  Haven,  212 

Geer  v.  Tenth  Sch.  Dist.,  198 

Gelpcke  v.  Dubuque,  55,  99 

George  v.  Harris,  100 

Gerli    v.    Poidebard    Silk    Mfg. 

Co.,  306 

Germain  v.  Union  Sch.  Dist.,        268 
Germann  v.  United  States,  167 

Getchell  V.  Peterson,  326 

Gibbons  v.  United  States,  2  Ct.  CI. 
421,  315 

V.  United  States,  15  Ct.  CI. 
174,         183,  192,  213,  287 
Gibbs  V.  Girardville  Sch.   Dist., 

167,  245 
Gibson  v.  Owens,  150 

Gibson  County  Bd.  of  Commrs. 
V.  Motherwell  I.  &  S.  Co., 

214,  218 
Gilliam  v.  Brown,  159 

Gihnan  v.  Lamson  County,  307 

Gilmore  v.  Utica,  6,  113,  147 

Givins  V.  People,  154 

Gleason  v.  Dalton,  128,  133 

Glenn  County  v.  Jones,         326,  340 
Ghdden   St.    Bk.   v.   Sch.    Dist., 

272,  298 
Glover  v.  People,  154 

Goodale  v.  Fennell,  80 

Goodman  v.  Niblack,  151,  209 

Goose  River  Bk.  v.  Willow  Lake 

Sch.  Tp.,  52 

Gordon  v.  State,  42,  73,  97,  164, 

237 
GorreU     v.     Greensboro    W.     S. 

Co.,  197 

Go.shert  v.  Seattle,  142 

Gosnell  v.  Louisville,  156 

Goss  V.  State  Capitol  Comm.,        1.50 


Gottlieb  K.  Co.  v.  Mackhn,  40 

Graham  v.  Lebanon,      348,  351,  359 

V.  United  States,  247,  314 

Grannis  v.  Blue  Earth  Co.,  3 

Grant  v.  Berrisford,  324 

V.  Rochester,  101 

V.  United  States,     146,  231,  234 
Grants  Pass  v.  Rogue  River  Pub. 

Serv.  Corp.,  358 

Gray  v.  Sch.  Dist.,  340 

Great  Northern  Ry.  Co.  v.  United 

States,  170 

Greater  New  York  Charter  (See. 

419),  123,  129,  130,  145 

(Sec.  1554),  115 

Green  v.  Everett,  146 

Green  Bay  Lumber  Co.  v.  Indep. 

Sch.  Dist.,  337 

Green  County  v.  Quinlan,  204 

Green  River  A.  Co.  v.  St.  Louis, 

159,  185 
Greene,  In  re,  42 

Greene  v.  Mayor,  121,  125 

Greenfield  &  Co.  v.  Parker,  326 

Greenlee  County  v.  Cotey,     249, 

302,  30S 
Greenough  i'.  Wakefield,  53 

Greenville  v.  Greenville  W.  Co., 

3,  163,  249 
Greenwood  v.  Bishop  of  London,  55 
Gregory  v.  Bridgeport,  43 

V.  United  States,  159,  231 

Gregg  School  Township  v.  Hin- 

shaw,  191,  291 

Griffith  V.  Sebastian  Co.,     90,  94,  245 
Griffith  Co.  v.  Los  Angeles,  215 

Griffiths  V.  Chicago  San.  Dist.,       163 
Griswold  v.  N.  Stonington,  72 

Grover  v.  United  States,  303 

Guerini  Stone  Co.  v.  Carlin  Cons. 

Co.,  240  U.  S.  264,     186, 189,  313 

V.  Carlin  Cons.  Co.,  248  U.  S. 
334,  302,  308 

Guild  V.  Andrews,  263 

Gunning  Gravel  Co.  v.  New  Or- 
leans, 147 
Gustavino  Co.  v.  U.  S.,          205,  360 
Gutta   Percha   M.   Co.    v.   Oga- 

lalla,  52 

Guy  V.  United  States,  303 


XXXVl 


TABLE   OF   CASES 


I  References  are  to  sections  ] 


H 


Hackett  v.  Campbell,  151 

Hackettstown  v.  Swackhamer,         77 
Hadfield  v.  New  York,  80 

Hadham  Rural  Council  v.  Cral- 

lan,  201 

Hague  V.  Philadelphia,  163 

Halbut  V.  Forrest  City,  12 

Haldane    v.    United    States,     89, 

162,  175 

Haliday  v.  United  States,      352,  357 

Hall  V.  Baker,  73 

V.  Buffalo,  208 

V.  Chippewa  Falls,  18 

V.  Cowen,  331 

V.  Marshall,  21 

V.  Sch.  Dist.,  292,  295 

Halstead  v.  Mayor,  53,  68 

Hamilton  v.  Gambell,  325 

V.  People,  154 

Hamilton     County     v.     Newlin, 

221,  223 
Hampton  v.  Logan  County,  58 

Hanger  v.  Des  Moines,  58,  77 

Hannan  v.  Bd.  of  Education,  113 

Hanscom  v.  Lowell,  47 

Harcourt  v.  Asbury  Park,  4 

Hardaway    v.    National    Surety 

Co.,  332 

Harder  v.  Marion  County,     162, 

243,  249 
Hardy  v.  United  States,  313 

Hardwick  v.  Wolcott,      12,  102,  136 
Harlem  G.  L.  Co.  v.  Mayor,     102, 

107,  128,  133,  134 

Harley  v.  Chicago  San.  Dist.,  95 

V.  San  Dist.,  246,  249 

Harlow  v.  Homestead,  265 

Harper   v.    Newburgh,     94,    119, 

245,  248 
Harris  v.  Baltimore,  208 

Harris  County  v.  Campbell,  300 

V.  Donaldson,  352 

Harrison  v.  Clarke,  313 

V.  Palo  Alto  County,  84 

Harrison  County  v.  Bline,  111 

Harrison     County     Commrs.     v. 

Byrne,  231 

Harrison  Tp.  v.  Addison,  90,  99 


Harrod  v.  State,  165 

Hart  V.   New   York,   55,  56,   99, 

107,  108,  112,  113,  114,  143, 

201,  219,  242,  267,  278 

V.  State,  337 

Hartford  v.  Hartford  E.  L.  Co., 

10,  112,  128,  133 

V.  Maslen,  40 

Hartman  v.  United  States,  83 

Hartupee  v.  Pittsburgh,  72 

Harvey    v.    United    States,     82, 

172,  189,  313 
Hasbrouck  v.  Milwaukee,  17  Wis. 
226,  239,  240 

V.  Milwaukee,  21  Wis.  217, 

218,  231 
Hase  V.  Seattle,  366 

Hastings  Pav.  Co.  v.  Cromwell,       115 
Hatfield  v.  Straus,  9,  71 

Hatfield  Sch.  Dist.  v.  Knight,         263 
Hathaway  v.  Milwaukee,  75 

Hathaway  &  Co.  y.  United  States, 

348 
Hattersly  v.  Waterville,  359 

Haughwout    V.    Mayor    of    New 

York,  111 

Hawkins   v.   United   States,     12, 

83,  166,  179,  180,  216,  222 
Hawks  V.  Charlemont,  298 

Hay  V.  Barbaboo,  366 

Hayden  v.  Astoria,  254 

Hayes  v.  Nashville,    94,  249, 

304,  308 
Heald  v.  Cleveland,  29,  35 

Heard    v.    Dooly    County,     216, 

352,  360 
Hedge  v.  Des  Moines,  156 

Hedges  v.  Dixon  County,  99 

Heidelberg   v.   St.    Francois 

County,  114 

Hellman  v.  Shoulters,  154 

Heman  v.  Gilliam,  283 

Henderson  v.  Palmer,  54 

V.  United  States,  137 

Henderson    Bridge    Co.    v.    Mc- 

Grath,  231,  254 

V.  O'Connor,  243 

Hendersonville  v.  Price,  59 

Hendrickson  v.  New  York,  5,  10 

Henegan  v.  United  States,     249,  263 


xxxvu 


TABLE   OF   CASES 


References  are  to  sections 


Henningsen  v.  U.  S.  F.  &  G.  Co.,     344 
Henrv  v.  Mt.  Pleasant  Tp.,  198 

Hepburn  v.  Phila.,  140 

Herman  i'.  Oconto,  57 

Heublein  Bros.  v.  New  Haven,         11 
Hewes  v.  Reis,  114 

Higgins  V.  San  Diego,  53,  107 

Higginson  v.  Boston,  8 

Highland  ,  County    Commrs.    v. 

Rhoades,  86,  87,  88 

Highway  Commrs.  v.  Blooming- 
ton,  82 
Hill  V.  Amer.  Surety  Co.,  326,  336 
V.  Easthampton,  79 
Hill  County  t).  Shaw  &B.  Co.,  99 
Hilliard  v.  Bunker,  146 
Hills  V.  Farmington,  159,  287 
Hinckley  v.  Pittsburg  Co.,  304 
Hingston  v.  L.  P.  &.  J.  A.  Smith 

Co.,  245 

Hinkle  v.  Phila.,  143,  146 

Hinkle  Iron  Co.  v.  Kohn,  209 

Hipwell  V.  National  Surety  Co., 

336,  340,  344 
Hitchcock  V.  Galveston,  57,  61 

Hobart  v.  Detroit,  115,  128 

Hobbs  V.  McLean,         151,  174,  209 
Hoboken  v.  Harrison,  59 

Hodges  ;;.  Buffalo,  79 

Holden  v.  Alton,  154,  155 

Holland  v.  Union  County,  287 

HoUerbach  v.  United  States,     82, 

158,  178,  195,  196,  226 
Holly  V.  New  York,  115 

Holmes  v.   Common   Council   of 
Detroit,  128 

V.  Kansas  City,  111 

Holton  V.  Camilla,  25,  30,  68 

Home    Bldg.    &    Con.    Co.    v. 

Roanoke,  125 

Homer  v.  Shaw,  177  Mass.  1,        311 
212  Mass.  113,     311 
Home  Tel.  Co.   v.   Los  Angeles, 

9,  206 
Honaker    v.    Bd.    of    Education, 

7,  49,  54 

Hood  V.  Lynn,  79 

V.  Whitwell,  323 

Hooe  V.  United  States,  10,  146 

Hooper  v.  Ewery,  79 


Hope  V.  Alton,  53,  74 

Horgan  v.  New  York,     82,   172, 

195,  196,  223,  226,  232,  237 
Horgan  &  Slattery,  Inc.  v.  New 

York,  16,  134 

Hostetter  v.  Pittsburgh,        250,  259 
Hough  V.  New  York,  99 

Houlton  V.  Nichol,  48,  49 

Hourigan  v.  Norwich,  68 

Houston  Cons.  Co.  v.  U.  S.,  313 

Hovey  v.  Wyandotte  County,  58 

Howard  v.  First  Indep.  Church,      50 
V.  Maine  Indus.  School,  126,  143 
Howell  V.  Millville,  68 

Hubbard  v.  Taunton,  79 

Hudson  V.  State,  141 

Hudson  E.  L.  Co.,  v.  Hudson  82, 

164 
Huggins  V.  Sutherland,  328,  347 

Hughes  V.  United  States,  4Ct.  CI. 
64,  303 

V.  United  States,  45  Ct.  CI., 
517,  352 

Hume  V.  United  States,  93 

Hunneman  v.  Grafton,  144 

Hunnicutt  v.  Atlanta,  30 

Hunsaker  v.  Borden,  364 

Hunter  v.  Pittsburgh,  8 

Huntington  v.  Force,  216 

Huntington    County     Board     v. 
Heaston,  367 

V.  Pashong,  113 

Huntington  County  Commrs.  v. 

Boyle,  111 

Hurley  v.  Trenton,  5 

Hurley  Water  Co.  v.  Vaughn,        133 
Huron  Water  Works  Co.  v.  Huron, 

68,  76 
Hyatt  V.  Williams,  68 

Hyde  Park  v.  Oakwoods  Ceme- 
tery Ass'n.,  9,  80 
Hydraulic  P.  B.  Co.  v.  Sch.  Dist.,  345 


Ihk  V.  Duluth,  346 

Ihrig  V.  Scott,  335 

Illinois  Surety  Co.  v.  John  Davis 

Co.,  172,  332 

V.  United  States,  353 


XXXVlll 


TABLE   OF   CASES 


References  are  to  sections  ] 


Illinois    Trust   &    Sav.    Bank    v. 
Arkansas  City,       10,  57,  62,  68 

Improvement    Commrs.    v.    Gal- 
braith,  215 

Independent    Sch.    Dist.    v. 

Collins,  248 

V.  Swearngin,  176,  194,  287 

Indiana  v.  Woram,  364 

Indianapolis  v.  Bly,  162,  243 

V.  Indianapolis  G.  Co.,   144,  164 
V.  Wann,  52,  146 

Indianapolis  Board  v.  Bender,         245 

Inge  V.  Bd.  of  Public  Works,     1 14, 

122,  142,  147,  153,  154,  155 

International  Cont.  Co.  v.  United 
States,  194 

International  Trust  Co.  t;.  Keefe 
Mfg.  Co.,  342 

Interstate  Vitr.  B.  Co.,  v.  Phila- 
delphia, 122 

Isaacs  V.  Dawson,  189 

Island  County  v.  Babcock,      20,  100 

Ittner  v.  United  States,         301,  360 


Jackson  County  Board  v.  Nichols,  367 
Jackson  Co.  L.  H.  &  P.  Co.  v. 

Independence,  170,  297 

Jacobs  V.  Elmira,  10 

James  v.  Allen  County,  307 

V.  Hamburg,  49 

Jamison  v.  Fopiana,  76 

Janeway  v.  Duluth,  6 

Jefferson  Board  of  Educ.  v.  Lit- 

treU,  191 

Jeffersonville  v.  Louisville  &  J.  S. 

F.  Co.,  Ill 

V.  Steam  Ferryboat,  111 

Jenney  v.  Des  Moines,  113 

Jersey  City  v.  Flynn,     174,  192,  360 

V.  Harrison,  71  N.  J.  L.  69,  82 
72  N.  J.  L.  185,     84 

V.  Jersey  City  W.  S.  Co.,  191 
Jersey    City    S.     Co.    v.    Jersey 

City,  52 

Jersey   City   Water  Comm.    v. 

Brown,  88,  140 

Jersey  City  W.  S.  Co.  v.  Metro- 

pohtan  Cons.  Co.,  340 


Jewell  Belting  Co.  v.  Bertha,        4,  5 
Jones  V.  Camden,  3,  40 

V.  Holzapfel,  3 

V.  Judd,     272,  290,  291,  295, 

298,  307 
V.  Lanier,  173/ 

V.  New  York,  47  N.  Y.  App. 

Div.  39,  302- 

V.  New  York,  60  App.  Div. 

161,     151,  243,  251,  263,  321 
V.  United  States,   1  Ct.  CI. 

383,  291 

V.  United  States,  96  U.  S., 
24,  288,  289,  292,  293 

Johns  V.  Pendleton,  128 

Johnson    v.    Albany,     163,    166, 

216,  237,  240 
V.  Phila.,  9 

V.  Sanitary  Dist.,  147 

V.  Stark  County,  57 

Johnson  City  v.  Railroad  Com- 
pany, 45 
Johnson  County  v.  Wood,  178 
Johnston  v.  New  York,  7,  161,  162 
V.  Philadelphia,  5,  145,  146 
Joy  V.  St.  Louis,  88,  96, 172, 173, 183 
Judson  V.  Winsted,  68 
Julian  V.  State,  74 
Jungdorf  v.  Little  Rice,  88,  138,  246 
Justice  V.  Lang,  82 

K 

Kane  v.  Fond  Du  Lac,  72 

Kansas  City  v.  Hansom,  156 

V.  O'Connor,  56,  59 

Kansas  City,  ex  rel  Blum  v. 

O'ConneU,  337,  338 

Kansas  City,  ex  rel.  Diamond  B. 

&  T.  V.  Schroeder,  327 

Kansas  City  Hyd.  P.  B.  Co.  v. 
Nat.  Surety  Co.,  149  Fed. 
507,  327,  336 

V.  Nat.  Surety  Co.,  157  Fed. 

620,  128,  327 

t^.  Youmans,  331 

Kansas  City  Sch.  Dist.  v.  Livers, 

325,  336,  340 

V.  Sheidley,  21 

Kauffmann  v.  Cooper,  325,  336,  340 


XXXIX 


TABLE   OF   CASES 


References  are  to  sections 


Kaukanna  E.   L.  Co.,   v.  Kauk- 

anna,  84 

Kay  v.  Monroe,  113,  115 

Kean,  State  v.  Elizabeth,  50 

Keane  v.  Xev/  York,  108,  130 

Kearney  v.  Downing,  146 

Keating  v.  Kansas  City,  11 

Keefe  v.  People,  153 

Keefer  v.  Sunbury  School  Dist.,      194 
Keen  v.  Waycross,  3,  25 

Keenan  v.  Trenton,  30 

Keever  v.  IMankato,  68 

Kehoe  v.  Rutherford,  313 

Kelley  ?'.  Broadwell,  3 

V.  Torrington,  329 

V.  Edwards,  122 

Kellogg  Bridge  Co.  v.  Hamilton,     159 
I'.  United  States,  313 

KeUy  V.  Bradford,  273,  281 

V.  Chicago,  149 

V.  New  York,  158,  237 

V.  Public  Schools  of  Muske- 
gon, 157 
V.  United  States,                       283 
Kennedy  v.  New  York,              5,  316 
V.  United  States,     239,  240, 

258,  352 
Kenwood  Bridge  Co.  v.  Dunder- 

dale,  313 

Ketchum  v.  Buffalo,  1,  3,  77 

Kieburtz  v.  Seattle,  194 

Kiessig  v.  Allspaugh,  327 

Kihlberg  v.  United  States,     257,  259 

Kilvington  v.  Superior,  133 

Kimball  v.  Cedar  Rapids,  56 

V.  United  States,  315 

King  V.  Des  Moines,  283 

V.  Downey,  325,  336 

V.    Duluth,     196,    216,    220, 

223,  226,  239 
V.  United  States,  243,  246 

King  Iron  &  B.  Co.  v.  St.  Louis, 

265,  283 
Kingman  v.  Brockton,  29,  40 

Kingsley  v.  Brooklyn,     160,  223, 

242,  268,  298 
Kinsella  v.  Auburn,  150 

Kinser  Con.  Co.  v.  State,  86,  158, 
159,  160,  192,  273,  287, 
288,  293,  296,  297,         361 


Kittinger  v.  Buffalo  T.  Co.,  7 

Klemm  v.  Newark,  100 

Knapp  V.  Swaney,  3,  325 

V.  United  States,  83 

Knickerbocker  Ice  Co.  v.  42d  St. 

&  G.  S.  F.  Co.,  76 

Knowles  v.  New  York,     90,  113, 

121,  125,  128,  153 
KnoxviUe  W.   Co.   v.   Knoxville, 

6,  68,  70,  206 
Koewing  v.  West  Orange,  90 

Konig  V.  Baltimore,  90 

Kramrath  v.  Albany,         18,  61,  102 
Krause  v.  Crothersvilie,  293 

Kronsbein  v.  Rochester,  153 

Kundinger  v.  Saginaw,  121,  143 


LaCoste  v.  New  Orleans,  128 

LaFrance  Eng.  Co.  v.  Syracuse, 

60,  278 
Laidlaw    D.    G.    Co.    v.    United 

States,  286 

Laird  Norton  Yds.  v.  Rochester, 

61,  108 
Lake  County  W.  Co.  v.  Walsh,  76 
Lake  Shore  &  M.  S.  R.  Co.  v. 

Richards,  305,  308 

Lake  View  v.  MacRitchie,     159, 

189,  287 
Lamar  W.  Co.  v.  Lamar,  174 

Lampman  v.  Cochran,  356 

Lamson  v.   Marshall,     163,   261, 

271,  300 
Lancaster  v.  Frescoln,  337 

V.  Miller,  5 

Lancaster  County  v.  Fulton,  65 

Landberg  v.  Chicago,  69 

Landry  v.  Peytavin,  360 

Landsdowne  v.  Cits.  El.  L.  Co.,         84 
Langdon  v.  Castleton,  74 

Langford  v.  Manchester,  212 

V.  United  States,  283 

Langley  v.  Harmon,  120 

Larned  v.  Syracuse,  113 

Lathan  v.  Wilmette,  156 

Lattimore  v.  Harsen,  97 

Laughlin  v.  Portland,     25,  29,  30, 

32,  33 


Xl 


TABLE   OF   CASES 


[  References  are  to  sections 


Laver  v.  EUert,  163 

Lawrence  v.  Methuen,  68 

V.  New  York,  263 

Lawrence    County    v.     Stewart, 

286,  360 
Leathers  v.  Springfield,  215 

Leavenworth  v.  Rankin,  172 

Leavitt  v.  Dover,  237 

I'.  United  States,  146 

Leeds,  Matter  of,  150 

LeFeber  v.  West  Allis,  56 

Lehigh  V.  11.  R.  v.  Canal  Bd.,  42 

Leiston  Gas  Co.  v.  Leiston-cum- 

Sizewell  Urban  Council,  204,  291 
Lemon  v.  Newton,  77 

Lentilhon    v.    New    York,     113, 

223,  225,  230,  255,  283 
LeTourneau  v.  Hugo,  121,  142 

Levy  V.  Kansas  City,  54,  55,  74 

Lewman  v.  United  States,     196, 

246,  251,  293 
Lewis  V.  Detroit  Bd.  of  Educ.  154 
Libby  v.  Portland,  75 

Lilienthal  v.  Yonkers,  135 

LUIy  V.  Indianapolis,  7 

Lincoln   v.  Little   Rock   Granite 

Co.,  360 

V.  Sun  Vapor  Street  L.  Co.,  90 
Lincoln  Land  Co.  v.  Grant,  61,  107 
Lincoln   Safe   Dep.  Co.  v.   New 

York,  71,  76 

Lindsey  v.  Philadelphia,  99 

V.  Rockwell  County,  359 

Liness  v.  Hesing,  49 

Link  Belt  Eng.  Co.  v.  U.  S.,     292,  360 
Littell  V.  Webster  County,  281 

Little  V.  Banks,  197,  348 

Little   Falls   Knitting   Mills  Co. 

V.  U.  S.,  145 

Littler  V.  Jayne,  113 

Livingston  County  v.  Graves,        293 
Loan  Ass'n  v.  Topeka,  37 

Loeb  V.  Montgomery,  170 

Logan  V.  Pyne,  30,  70 

Logan  County   v.  United  States, 

11,12 
London  &   N.   Y.   Land   Co.   v. 

Jellicoe,  108 

Long  V.  Athol,     94,  119,  195,  196, 

245,  248,  249 


Long  V.  Battle  Creek,  91,  96 

V.  Duluth,  1,  10,  70 

V.  Lemoyne,  18,  61,  104 

V.  Pierce  County,     165,  171, 

214,  218,  220,  239,  283,  30^ 

Long  Beach  Sch.  Dist.  v.  Dodge, 

82,  172 
Long  Island  C.  &.  S.  Co.  v.  New 

York,  298,  313,  323 

Lord  V.  New  York,  164 

V.  Thomas,     97,     148,     249, 

291,  299,  307,  313 
Lord  &  Hewlett  v.  United  States,  93 
Los  Angeles  W.  Co.  v.  Los  An- 
geles, 3,  170 
Lott  V.  Waycross,  68 
Louchheim  v.  Philadelphia,  142 
Louisiana  v.  Wood,     59,  60,  104, 

107 

Louisville  v.  Gosnel,  146 

V.  Murphy,  74 

Love  V.  Raleigh,  79 

Low  V.  Marysville,  37 

V.  Redditch  Local  Board,       356 

Lowell  V.  Boston,  41 

Lowry  v.  Duluth,  209 

Lucas  Co.  V.  Hunt,  64 

V.  Robert,  340 

Lucia  V.  Montpelier,  6 

Ludington  W.  S.  Co.  v.  Luding- 

ton,  68 

Ludlow  Valve  Mfg.  Co.  v. 

Chicago,  73,  352 

Ludowici  Caladon  Co.  v.  Indep. 

Sch.  Dist.,  321 

Lutes  V.  Briggs,  163 

Luther  v.  Wheeler,  3 

Luques  v.  Dresden,  37,  79 

Lydecker  f .  Nyack,  111 

Lyddy  v.  Long  Island  City,     10, 

11,  74 
Lyle  V.  Jackson  County,  91,  96 

Lyman  v.  Lincoln,  162,  273,  337 

Lynch  v.  New  York,     123,   143, 

148,  188 
V.  Springfield,  68 

Lynchburg  &  Co.  v.  Dameron,        46 
Lynip  v.  Alturas  Sch.  Dist.,  246 

Lyon  V.  Mitchell,  48 

Lyth  V.  Hingston,  325 


xli 


TABLE   OF   CASES 


[  References  are  to  sections  ] 


M 


McAllister  v.  Fid.  &  D.  Co.,  332 

V.  Tacoma,  156 

McAneny,  Matter  of,       1,  9,  38,  80 
McArthur  v.  Cheboygan,  205 

McBean  v.  Fresno,  3,  9 

McBrian  v.  Grand  Rapids,     129, 

138,  142 
McCain  v.  Des  Moines,  174,  281 
JVIcCann    v.    Albany,     223,    352, 

357,  360 
IMcCartan  v.  Trenton,  163 

McCauley  v.  Brooks,  199,  200 

V.  Des  Moines,  237 

Macey  Co.  v.  New  York,       286,  360 
McClintic  M.  Cons.  Co.  v.  Hudson 

County  Board,         183,  283, 

284,  348,  360 
McCIoud  V.  Columbus,  114 

V.  Selby,  364 

McClure  v.  United  States,  5 

McConaughey  v.  Jackson,  367 

McConnell   v.   Corona   City   W. 

Co.,  246 

McCook  County  v.  Burstad,  97,  101 
McCord  V.  Lauterbach,  116, 

117,  135 
McCormick  v.  Oklahoma  City,       242 

V.  St.  Louis,  265 

McCotter  v.  New  York,  89,  91 

McCoy  V.  Briant,  5 

McCubbin  v.  Atchison,  209 

McCulloch  V.  State,  7 

McCullough  V.  Virginia,     55,  57,  99 
McDermott  v.  Street  &  W.  Comm. 

Jersey  City,  142 

McDonald  v.  Mayor,     5,  11,  17, 

52,  107,  108,  138 

V.  New  York,  325 

McDonogh  v.  Murdoch,  47 

McEwcn  V.  Coeur  D'Alene,  128 

MacFarland  v.  Barber  A.  P.  Co.,     272 
McFerran  v.  United  States,  212, 

231 
McGaffin  v.  Coboes,  366 

McGillivray  v.  Joint  Sch.  Dist., 

52,  57 
McGlynn  v.  Toledo,  156 

McGovem  v.  New  York,  15 


McGovern     v.    Trenton    Bd.   of 

Public  Wks.,  147 

McGowan  v.  United  States,  321 

McGregor  v.  Bd.  of  Education,       318 
McGuire  v.  Rapid  City,     61,  261,  263 

V.  Smock,  50 

Mack  V.  New  York,  10 

McKee  v.  Greensburg,  52,  242 

MacKnight  Flintic  Stone  Co.  v. 

Mayor,  159,  261,  287 

McLaughlin  v.  Bayonne,  216 

McLaughlin    &    Co.    v.    United 

States,  36  Ct.  CI.  138,    137,  166 

V.  United  States,  37  Ct.  CI. 

150,  137 

McLean    County    Coal    Co.    v. 

Bloomington,  170 

McManus  v.  Boston,  84 

V.  Phila.,     138, 139, 151, 166,  216 
McMaster    v.    State,     160,    163, 

186,  236,  254,  283 
McMillan  v.  Barber  Asphalt  Co., 

7,  99 

V.  Klaw  &  Erlanger,  71 

McMullen  v.  Hoffman,  99,  100 

MacMuUen  v.  Middletown,  366 

McNeal  v.  Waco,  5,  146 

McPherson  v.  Foster,  57 

MacRitchie  v.  Lake  View,  159 

Macy  V.  Duluth,  108 

Madden  v.  Boston,  84 

Madison    v.    Amer,    San.    Eng. 

Co.,  352,  356 

V.     Baltimore     Harbor     Bd., 

147,  149 
Madler  v.  Silverstone,  358 

Mahan  v.  Mayor,  298 

Mahan,  Re,  113 

Maher  v.  Chicago,  12,  102,  108 

Mahon  v.  Columbus,  246 

Maine  Water  Co.  v.  Waterville,       68 
Mairs  w.  Mayor,  237 

Maisch  v.  New  York,  365 

Mallette  v.  Spokane,  154 

Malloy  V.  Braircliff  Manor,     210, 

217,  263,  266,  270 
Malone  v.  Phila.,  263 

V.    Philadelphia,     166,    352, 

357,  360 
Manhattan  Sav.  Inst.,  Matter  of,  113 


xlii 


TABLE   OF   CASES 


[  References  are  to  sections  ] 
Mankato  v.  Barber  A.  P.  Co.,        142       Memphis  G.  L.  Co.  v.  Memphis,     138 


Mankin  v.  Ludowici  Celadon  Co.,  332 
Manning  v.  Devil's  Lake,  37 

V.   Sch.   Dist.   Ft.  Atkinson, 

250,  273,  281 
Manville  v.  McCoy,  287 

Marconi  Wireless  Co.  v.  Simon,     109 
Marion  W.  Co.  v.  Marion,  108 

Markey  v.   Milwaukee,         163,  269 
Markley  v.  Mineral  City,  37,  75 

Marsh  v.  Fulton  County,  11,  60 

Marsh,  Re,  113,  116 

Marshall  v.  Kansas  City,  365 

Marshall  &  Bruce  v.  Nashville,       154 
Martel  v.  E.  St.  Louis,  66 

Martens  &  Co.,  Inc.  v.  Syracuse,     119 
Martin  v.  Brooklyn,  9 

V.  United  States,  213 

Maryland  Casualty  Co.  v.  Wash- 
ington N.  Bk.,  344 
Maryland  Dredg.  Co.  v.  United 

States,  357 

Maryland    Steel    Co.    v.    United 

States,     11, 12, 139, 163, 164, 

166,  362 
Mason  v.  Des  Moines,  300 

Masterson  v.  Brooklyn,     272, 

298,  304,  307 
Mather  v.  Butler  County,  167 

V.  Ottawa,  37 

Mauldin  v.  Greenville,  3 

Maurer  v.  Sch.  Dist.,     259,  270,  286 
Maxcy  v.  Oshkosk,  47 

May  V.  Chicago,  11,  146 

V.  Gloucester,  5,  57,  146 

Maynard  v.  Woodard,  47 

Mayo    V.    County    Commrs.    of 

Hampden,  121 

Maysville  v.  Wood,  47 

Mazet  V.  Pittsburgh,  113 

Meade  County  v.  Welch,  83 

Mealey  v.  Hagerstown,  53 

Mechanic's  Bank  v.  New  York, 

161,  162,  276,  302,  368 
Medford  v.  Learned,  111 

Medina  v.   Dingledine,     5,    99, 

108,  153 
Meech  v.  Buffalo,  97,  164 

Memphis  v.  Adams,  74 

V.  Brown,  90 


Mercer  County  v.  Covert,  204 

Merchants  Exch.  Co.  v.  United 

States,  213,  214,  215,  231 

Meriwether  v.  Garrett,  76 

V.  Lowndes  County,       292,  318 
Merriam  v.  Bamum,  74 

V.  United  States,  315 

Merriam,  Matter  of,  113,  151 

Merrifield  v.  Canal  Commrs.,         193 
Merrill  v.  Monticello,  58,  77 

Merrill-Ruckgaber  Co.  v.  United 

States,  170,  212,  2.54 

Messenger  v.  Buffalo,     164,  166, 

214,  223,  231 
Metropolitan  G.  L.  Co.,  Re.,  113 
Metropolitan  Water  Bd.  v.  Dick, 

204,  291 
Meuser  v.  Risdon,  150 

Michaels  v.  McRoy,  345 

Michigan  Sugar  Co.  v.  Auditor 

Gen.,  37 

Middletown  v.  Emporia,        120,  126 

V.  St.  Augustine,  68 

V.  State,  59 

Milbank  v.  Jones,  48,  49 

Milford  V.  Coram.,  83 

Millen  v.  Boston,  216 

Miller  v.  Hamilton,  186,  189 

V.  Mullan,  366 

V.  Schloss,  83 

Milligan  v.  Miles  City,  30 

MiUiken  v.  Callahan  Co.,  246 

Mills  V.  Mills,  48,  49 

Mills  Co.  V.  State,  316 

Millvale,  In  re,  7 

Milner  v.  Trenton,  128 

Milnes  v.  Huddersfield,  68 

Milwaukee  v.  Raulf,  151,  191 

Milwaukee  Elec.  R.  &  L.  Co.  v. 

Railroad  Commrs.,  70 

Milwaukee  Elec.  R.  Co.  v.  Mil- 
waukee, 185 
Minneapolis  R.  Co.  v.  Street  Ry. 

Co.  9 

Minneapolis   &   Elec.   T.    Co.   v. 

Minneapolis,  58,  78 

Minnesota  Sugar  Co.  v.  Iverson,       37 
Minturn  v.  Larue,  70 

Missouri  Pac.  Ry.  Co.  v.  Nebraska,  37 


xliii 


TABLE   OF   CASES 


References  are  to  sections  ] 


Mitchell  t'.  Burlington,  37 

I'.  Dakota  Tel.  Co.,  206 

V.  Hancock  County,        292,  318 

V.  Milwauktv,  150 

Mobile  County  f.  Linch,         186,  194 

Mobile  Elec.  Co.  v.  Mobile,     9, 

10,  62,  206 
Modem  Steel  Structural  Co.  v. 

Van  Buren,  320 

Moffett  &  Co.  V.  Rochester,     94,  119 
Mollov  V.  New  Rochelle,     7,  123, 

147,  148,  149 
Monaca  i'.  Monaca  St.  Ry.  Co., 

291,  292 
Monaghan  v.  Indianapolis,  128 

Monarch  v.  McDonogh  Sch.  Fund, 

216 
Monnier  v.  Godbold,  345 

Moon       V.       Howard       County 

Commrs.,  Ill 

Monroe  i'.  United  States,       137,  145 
Monroe  W.  Co.  v.  Heath,  10 

Monroe  W.  Wks.  Co.  v.  Monroe, 

56,  57 
Monteverde  v.   Bd.   of  Supervs. 

Queens  County,  281 

Montgomery  v.  Bamett,  156 

V.  Mayor,  284,  285 

V.  Montgomery  W.  W.  Co., 

77  Ala.  248,  83 

V.  Montgomery  W.  W.  Co., 

79  Ala.  233,  10 

V.  Rief,  336 

Montgomery    Co.     Commrs.     v. 

Ristine,  83 

Moore  v.  Albany,  164 

V.  Bd.  of  Education,  101 

V.  Bd.  of  Regents,  360 

V.  Detroit,  11 

V.  Haddonfield,  7 

V.  New  York,  4,    61,  64,  102, 

108 

V.  Platte  County,  353,  360 

V.  Sanford,  37 

I'.  United  States,  194 

Moorhead  v.  Murphy,  43,  74 

Moran  v.  Thompson,       45,  121,  142 

Moreland  i'.  Passaic,  116 

Morgan  v.  Baltimore,    212,  241,  243 

V.  Salmon,  340 


Morgan  County  Commrs.  v. 

Seaton,  111 

Morgan  Park  v.  Gahan,         120,  359 
Morley  v.  St.  Joseph,  185 

Morrill  &  W.  Cons.  Co.  v.  Boston,  177 
Morris  v.  United  States,  360 

Morris  &  Cummings  Dredg.  Co. 

V.  New  York,  113 

Morrison  v.  Lawrence,  110 

Morton  v.  Power,  336 

Moses  V.  United  States,  364 

Mosler  Safe  Co.  v.  Maiden  Lane 

S.  D.  Co.,  283,  360 

Moss  V.  Rowlett,  338 

Motschman  v.  United  States,        360 
Mott  V.  Utica,  163 

Mound  City  v.  Snoddy,  61,  74 

Mount  Morris  v.  lung,  171 

Muff  V.  Cameron,  113,  128 

Mulholland  v.  Mayor,  223,  228,  231 
Mullan  V.  State,  58 

Muncie  Nat.  Gas  v.  Muncie,  183 

Mundy  v.  United  States,  352 

Municipal    Fuel    Plants,    In    re, 

29,  30,  32,  33 

Munn  V.  Illinois,  27 

Munro  v.  State,  42 

Munsell  v.  Lewis,  208 

Murphy  v.  Albina,  219 

V.  Jacksonville,  58 

V.  Louisville,  138 

V.  Plattsmouth,  208 

V.  St.  Louis,  298 

V.  United  States,  215,  227 

Murray  v.  Bayonne,  147 

Murtagh  v.  Dist.  of  Columbia,      207 

Muscrelli    v.     Mercantile    Trust 

Co.,  322 

Mutchler  v.  Easton,  120 

Mutual  Life  Ins.  Co.  v.  Mayor, 

114 
Myers  v.  Penn  Steel  Co.,  56 


N 


Nash  V.  St.  Paul, 

142 

Nashville  v.  Ray, 

77 

V.  Sutherland, 

44,  46,  58 

V.  Toney, 

197 

Nathan  v.  O'Brien, 

113,  149 

xliv 


TABLE   OF   CASES 


References  are  to  sections 


National  Bldg.  Sup.  Co.  v.  Balti- 
more, 233 
National    Cont.    Co.    v.    Comm., 

199,  200,  246,  259,  302 
V.    Hudson    River    P.    Co., 
152,  160,  163,  236,  249,  252, 
254,  272,  308 

National  Fertilizer  Co.  v.  Lam- 
bert, 69 
National  Surety  Co.  v.  Berggren,  344 
V.  Bratnober  L.  Co.,  331 
V.  Foster  Lumber  Co.,  336 
V.  HaU-Miller  Dec.  Co.,  325 
V.  Kansas  City    Hyd.  P.  B. 

Co.,  128,  327 

V.  Long,  340 

V.  Wyandotte  C.  &  L.  Co.,     327 
National  Tube  Wks.  v.  Chamber- 
lain, 59,  61 
Neale  v.  Wood  County,  45 
Nebraska  Bitulithic  Co.  v.  Omaha, 

108 
Nebraska  City  v.  Nebraska  City 

H.  G.  L.  &  C.  Co.,  56,  164,  313 
Neilson  v.  Title  G.  &  S.  Co.,  340 
Nelson  v.  Mayor,  63  N.  Y.  535, 

102,  105,  107 
V.  Mayor,  131  N.  Y.  4,     12, 

65,  147 
Nelson  Co.  v.  Stephenson,  336 

Neosho  &c.  W.  Co.  v.  Neosho,  10,  300 
Nesbit  V.  Riverside  &c.  Dist.,  11 

Ness  V.  Bd.  of  Commrs.,  201 

Neumeyer  v.  Krakel,  5 

Nevada  County  v.  Hicks,  357 

Newark  v.  Bonnell,  115 

Newbery  v.  Fox,  52,  108 

Newbold  v.  Clenn,  76 

New  Athens  v.  Thomas,  136 

New  Britain  v.  New  Britain  Tel. 

Co.,  186,  348,  357 

New  Decatur  v.  Berry,  58 

New  Haven  v.  Nat.  Steam  Econo- 
mizer Co.,  340 
V.  Weston,  79 
New  Jersey  Car  Spr.  &c.  Co.  v. 

Jersey  City,  17,  108,  111 

New  Jersey  &  N.  E.  Tel.  Co.  v. 

Fire  Com.,  5 

New  London  v.  Brainard,  79 


New  London,  Bd.  of  Commrs.  v. 
Bobbins,    90,  98,  195    196,  245 

New  Orleans  v.  Morris,  76 

V.  New  Orleans  Sugar  Shed 

Co.,  56 

V.  New  Orleans  W.  Co.,         8,  9 
V.  Ripley,  198 

V.  Sanford,  9 

V.  Warner,  7 

Newport  v.  Newport  B.  Co.,  281 

V.  Newport  L.  Co.,  368 

V.  Phillips,  162,  249 

V.  Ry.  Co.,  58 

Newport   News   v.   Potter,     114, 

134,  164,  166 

Newton  v.  Devlin,  272 

V.  Toledo,  132 

V.  C.  R.  I.  &  Pac.  Ry.  Co.,      78 

New   York   v.   Am.    Railway   T. 
Co.,  178 

New  York  v.  Brooklyn  City  R.  R. 
Co.,  38 

V.  Bryan,  80 

V.  Butler,  166 

V.  Continental  A.  Co.,      86,  158 
V.  Delli  Paoli,     59,  86,  91,  95, 

158,  192 
V.  Dexter,  300 

V.  Dowd  Lumber  Co.,      94,  119 
V.  Hudson  &  M.  R.  Co.,  71 

V.  New  York  City  Ry.  Co.,     193 
V.  Penn  Steel  Co.,  159 

V.  Rice,  71 

V.  Second  Ave.    R.  Co.,  32 

N.  Y.  261,  80 

V.  Second  Ave.  R.  Co.,  102 

N.  Y.  572,  272,  .321 

V.  Seeley  T.  Co.,  119,  120 

V.  Sonnebom,  59 

V.  Union  News  Co.,  3,  143,  151 

New   York   Cath.    Protectory   v. 
Rockland  Co.,  366 

New  York  Elec.  Lines  Co.  v.  Em- 
pire City  Subway  Co.,  80 

New  York  Metal  Ceiling  Co.  v. 
New  York,  186 

Nicola  Bros.  v.  Hegeman,  332 

Nicholasville  W.  Co.  v.  Nicholas- 
ville,  56 

Nicholson  v.  Painter,  115,  133 


xlv 


TABLE   OF   CASES 


[  References  are  to  sections  ] 


Nicoll  V.  Sands,  193 

NUand,  In  re,  5,  11,  108 

NUes  Water  Wks.  v.  Niles,  108 

Nilson  V.  Jonesboro,  358 

Noel  V.  San  Antonio,  5 

Norbeck  &  N.  Co.  v.  State,  65,  99 
Norrington  r.  Wright,  306,  312 

Northampton  i'.  Smith,  248 

North    Bergen    Bd.   of   Educ.    v. 

Jaeger,  188 

North  Eastern  Cons.  Co.  v.  New- 
York,  195 
V.    North    Hempstead,     87, 

89,  118,  119,  124 
Northern  Ohio  Trac.  Co.  v.  Ohio,  206 
Northern  Pacific  Ily.  Co.  v.  Du- 

luth,  9 

North  Pacific  L.  &.   M.   Co.  v. 

East  Portland,  166 

Northport    v.    Northport    Town- 
site  Co.,  65,  99 
North  River  Elec.  L.  Co.  v.  New 

York,  107,  132 

North  Springs  W.  Co.  v.  Tacoma,  6 
Northwest  Steel  Co.  v.  Sch.  Dist.,  346 
North  Yakima  v.  Scudder,  143 

Norton  v.  Roslyn,  5,  209 

V.  Shields,  194 

Norwich  G.  L.  Co.  v.  Norwich  G. 

Co.,  70 

Noyes  v.  Granger,  337 

O 

Oakes  Mfg.  Co.  «;.  New  York,  68 
Oakley    t'.    Atlantic    City,     114, 

121,  143 
Oak  Park  v.  Gait,  128 

O'Brien  v.  Mayor,     113,  146,  152, 

212,  216,  229,  239,  257,  263,  264 
O'Connor  v.  Fon  Du  Lac,  366 

O'Corr  &  Rugg  Co.  v.  Little  Falls, 

54,  151,  209,  268 
O'Dea  V.  MitcheU,  270 

V.  Winona,  193,  214 

Odineal  v.  Barry,  20 

O'Hara  t;.  New  Orleans,  163 

V.  State,  42 

O'Hare  v.  Dist.  of  Columbia,  231 
Ohio  V.  Findley,  99 


Ohio  Life  Ins.,  etc.,  Co.  v.  Debolt, 

364 

O'Keeffe  v.  New  York,  156,  185 

Oliver  v.  Worcester,  75 

Omaha  v.  Hammond,  250 

j;.  Standard  Oil  Co.,  209 

Omaha  Water  Co.  v.  Omaha,  147 

Fed.  1,  10,  183 

V.  Omaha,  156  Fed.  922,         281 

O'Neill  V.  Milwaukee,  223 

V.  Title  G.  &  T.  Co.,      340,  344 

Opinion  of  Justices,  150  Mass.  592, 

68 
155  Mass.  598,     27,  29, 

32   33 

204  Mass.  607,  34*,  37 

208  Mass.  619,  153 

211  Mass.  624,  34 

58  Me.  590,  32 

Ordway  v.  Newburyport,  15 

Oregon  S.  Nav.  Co.  v.  Winsor,      206 

Orleans  County  v.  Bowen,  73 

O'Rourke  v.  Phila.,  11,  226,  234 

O'Rourke  Eng.  &  Cons.   Co.  v. 

New  York,  15 

Osborne  v.  Adams  County,  37 

V.  Lyons,  142,  156 

Oscanyan  v.  Arms  Co.,     49,  65,  100 

Osgood  V.  Boston,  5,  11 

Ostendorff  v.  Charleston  Co.,         HI 

Ottawa  V.  Carey,  30,  41 

Owen  V.  Hill,  345 

V.  United  States,  232 

Owens  V.  Butler  County,  237 

V.  Marion,  114 

Owensboro  v.  Cumberland  T.  & 

T.  Co.,  206 

V.  Owensboro  W.  Wks.  Co.,     206 

Overall  v.  Madisonville,  68 


Pacific  Bridge  Co.  v.  Clackamas 

County,  129,  231 

Pacific  Hardware  Co.  v.  United 

States,  170,  348,  353 

Packard  v.  Hayes,  113 

Packwaukee  v.  Amer.  B.  Co.,  193,  247 
Paine  v.  Boston,  7 

Paine,  Re,  113 


xlvi 


TABLE   OF   CASES 


[  References  are  to  sections 


PaUadino  v.  Mayor,  189,  212 

Palmer  v.  Albuquerque,  40,  76 

V.  Haverhill,  147 

V.  State,  99 

Paola,  Bd.  of  Educ.  v.  Shaw,         263 
Paret  v.  Bayonne,  72 

Park  V.  Sykes,  325 

Parker  v.  Jeffery,  336,  337 

V.  Philadelphia,  105 

Parker-Washington    Co.  v.    Chi- 
cago, 170,  349,  351,  353,  356 
Parkersburg  v.  Brown,        37,  59,  99 
Parkhurst  v.  Salem,  1 

Parlin  &  OrendorS  Co.  v.  Green- 

viUe,  250 

Parr  v.  Greenbush,  72  N.  Y.  463, 

13,  108 

V.  Greenbush,  112  N.  Y.  246, 

307,  313 
Parrott  v.  Mexican  C.  R.  Co.,  97 
Patridge  v.  Ballard,  22 
Patterson  v.   Chambers   P.   Co., 

90,  91,  100 
Paterson  Chronicle  v.  Paterson,  153 
Patton  V.  Gilmer,  364 

Paul  V.  Seattle,  16,  17 

Pauly  Jail  Bldg.  &  M.  Co.    v. 
Collins,  340 

V.  Hemphill  Coiinty,  256 

Pawhuska  v.  Pawhuska  O.  &  G. 

Co.,  9 

Peabody  v.  United  States,     109,  293 
Pearson  v.  Seattle,  66 

Peck  V.  United  States,  213 

Peckham  v.  Watsonville,  147 

Peekskill  etc.  R.  Co.  v.  Peekskill, 

357,  358 
Peet  V.  East  Grand  Forks,    302, 

308,  309 
Peirce  v.  ComeU,  88,  272 
Pelton,  Re,  113 
Penley  v.  Auburn,  9,  22 
Penn    Bridge    Co.    v.    Kershaw 

County,  237,  265,  293 

V.  New  Orleans,  159,  287 

Pennell  v.  Mayor,     123,  140,  143, 

148,  188 
Pennie,  Re,  114 

People  V.  Albany  &  Vermont  R. 
Co.,  80 


People  V.  Broadway  R.  Co.,  80 

1'.  Brooklyn,  111 

t'.  Buffalo,  367 

V.  Clarke,  164 

V.  Coler,  56  N.  Y.  App.  Div. 

98,  243 

V.  Coler,  166  N.  Y.  1 ;  59  N.  E. 

716,  8,  55,  153,  154 

V.  Contracting  Board,  120 

V.  Crane,  153,  154 

V.  Dulaney,  181 

V.  Dummer,  82,  83 

V.  Dunbar  Cont.  Co.,  93 

V.  Gardner,  7 

V.  Grout,  153 

V.  Kane,  130 

V.  Love,  357 

V.  Manning,  295 

V.  O'Brien,  70 

V.  Orange  County  Road 

Const.  Co.,  153 

V.  Powers,  341 

V.  Republic    Sav.  L.    Assoc. 

Co.,  249 

i;.  San  Francisco,  73,  144 

V.  Shepard,  7 

V.  Stephens,  242,  247 

V.  Troy,  147 

V.  Westchester  Co.  Nat.  Bk. 

37,  41,  43,  45,  78 

People    ex    rel.    Ajas    v.    Bd.  of 
Educ,  148 

Assyrian  A.  Co.  v.  Kent,  122,  147 
Belden  v.  Cont.  Bd.,  330 

Buffalo  Pav.  Co.  v.  Mooney,  148 
Canajoharie     Nat.     Bk.     v. 

Montgomery  Co.,  80 

Coughlin  V.  Gleason,  7, 122,  147 
Dowdney  v.  Thompson,  148 

Dunkirk  W.  &  P.  R.  Co.  v. 

Batchellor,  8 

Fisher  v.  Lennon,  148 

Forst  V.  Fay,  150 

Graves  v.  Sohmer,    82,  160, 

172,  242,  364 
Bamberger  v.  Peyton,  163 

Healy  v.  Clean  St.  Co.,  4,  9,  71 
Lunney  v.  Campbell,  147,  148 
Lyon    Co.    v.    McDonough, 

18,  19,  125,  330 


xlvii 


TABLE   OF   CASES 


[  References  are  to  sections 


People  ex  rel.  McCabe  v.  Snedeker, 

210,  214,  215,  230 
McDonough  v.  Bd.  of  Man- 
agers, 170 
McKone  v.  Green,                    330 
New   York    Central   &c.    R. 

Co.  I'.  Priest,  76 

North  V.   Featherstonhaugh, 

153,  154,  156 
O'Reilly  v.  Comm.  Council, 

5,  18 
Park  Commrs.  v.  Detroit,  68 
Pontiac    v.    Cen.     U.    Tel. 

Co.,  70 

Powers  &  M.  Co.  v.  Schnei- 
der, 230 
Rapid  Trans.  S.  Cons.  Co.  v. 

Craven,  152 

Ready  v.  Mayor,  301 

Reynolds  v.  Buffalo,  SO 

Rodgers  v.  Coler,  35  N.  Y. 

App.  Div.  401,     112,  117,  135 
Rodgers  v.  Coler,  166  N.  Y. 

1,  8,  55,  153,  154 

Satterlee  v.  Bd.  of  Police,        101 
Shay  v.  McCormack,  147 

Smith  t'.  Clarke,  12 

Smith  V.  Flagg,  5  Abb.  Pr. 

232,  134 

Smith  V.  Flagg,  17  N.  Y.  584, 

128 

Spencer  v.  Knight,  74 

Waddy  v.  Partridge,  42 

Williams  v.  Metz,  154,  189,  190 

People's  Lumber  Co.  v.  Gillard,       325 

People's    Railroad    v.    Memphis 

Railroad,  91 

People  use  of  Emack  v.  Thompson  335 
Pepin  Co.  v.  Prindle,  22,  100 

Perin  v.  Carey,  47 

Perine  Cont.  &  Pav.  Co.  v.  Pasa- 
dena, 120 
V.  Quackenbush,  128 
Perkins  v.  Milford,  79 
Perry  v.  Superior,  58 
V.  Panama  City,  17 
Perry    Water  L.  &  Ice.    Co.  v. 

Perry,  52,  108 

Peters  v.  St.  Louis,  11 

Petersburg  v.  Mappin,  73 


Peterson  v.  Mayor,     11,  65,  102, 

134,  136 

Phelan  v.  New  York,     172,  257,  259 

Phelps  V.  New  York,  4,  121 

Philadelphia  v.  Flanigen,  53 

V.  Fox,  47 

V.  GUmartin,  68 

V.  Girard,  47 

V.  Jewell,  172 

V.  Lockhardt,  208 

V.  McLinden,     154,  325,  327,  339 

V.  Malone,  331 

V.  Nichols  Co.,  327,  335 

V.  Pemberton,  147,  156 

V.  Pierson,  341 

V.  Stewart,  325 

Phillips  V.  Baltimore,  365 

Phillips,  Matter  of,  206 

Phillips  Cons.  Co.  v.  Seymour,       286 

Phoenix  v.  Gannon,  3,  71 

Phoenix  B.  Co.  v.  United  States, 

38  Ct.  CI.  492,  292 

V.  United  States,   211  U.  S., 

188,  215,  238 

Phoenix  I.  Co.  v.  United  States, 

348,  352,  353,  357 
Picket     Pub.     Co.     v.     Carbon 

County,  10 

Pickett  V.  Wiota  Sch.  Dist.,  100 

Piedmont  Pav.  Co.  v.  AUman,  113, 172 
Pierce    v.    United   States    (The 

Floyd  Acceptances),  5,  11 

Piercey  v.  Johnson  City,  365 

Pigeon  V.  United  States,  352 

Pike  V.  Middleton,  42,  43 

V.  Waltham,  203 

Pilcher  v.  English,  114 

Pimental  v.  San  Francisco,  60 

Piper  V.  Madison,  68 

Pitt  V.  Bd.  of  Education,  101 

Pitt  Const.  Co.  V.  Dayton,  170 

Piatt  V.  San  Francisco,  38 

Platte  County  v.  Gerrard,  101 

Plattsburgh,  Matter  of,  132,  192 

Pleasant  Tp.  v.  Aetna  Life  Ins. 

Co.,  38 

Plumb  V.  Christie,  25,  35 

Plumley  v.  United  States,      215,  216 
Plununer  v.  Kennedy,  345 

Poillon  V.  Brooklyn,  103 


xlviii 


TABLE   OF   CASES 


References  are  to  sections 


Polk  V.  McCartney,  114 

Pond  V.  New  Rochelle  W.  Co.,  197 
Port  Jervis  W.  Co.  v.  Port  Jervis, 

102,  107,  112 
Porter  v.   Tottenham  Urban 

Council,  192 

Portland  v.  Baker,  246 

V.  Portland  Bituminous  P.  & 
I.  Co.,     59,  61,  90,  156,  327 
Portland  &  Co.  v.  East  Portland, 

1,  18,  53,  61 
Posey  V.  North  Birmingham,  68 

Potts  V.  Philadelphia,  114 

V.  Whitehead,  89 

Powell  V.  Newburgh,  43 

Powers  V.  Skinner,  48 

V.  Yonkers,  162,  243,  321 

Poynter  v.  U.  S.,  310 

Prairie  State  Bank  v.  U.  S.,     209, 

340,  344 
Press  Publ.  Co.  v.  Pittsburgh,  143 
Preston    v.    Syracuse,    82,     192, 

240,  270 
Price  V.  New  York,  302 

Prince  v.  Crocker,  38 

Providence  v.  St.  John's  Lodge,  173 
Providence  Tool  Co.  v.  Norris,  48 
Pryor  v.  Kansas  City,  146 

Puget  Sound  B.  &.  T.  Co.  v.  Sch. 

Dist.  Kings  Co.,  337 

Puget  Sound  State  Bk.  v.  Gal- 

lucci,  325 

Puget    Sound    Traction    Co.    v. 

Reynolds,  9 

Purcell  Envelope  Co.  v.  U.  S.,       245 

Q 

Quigley   v.   County    of   Sumner, 

199,  207,  245 

Quincy  v.  Atty.  Gen.,  47 

t-.  BuU,  164 

Quinlan  v.  Green  County,  203,  204 

Quinn  v.  Mayor,  263,  264 

V.  United  States,  150 

R 

Rackliffe  G.  Cons.  Co.  v.  Walker,  128 
Raley  v.  Umatilla,  75 


Ramapo  Water  Co.  v.  New  York,  80 
Randolph  County  v.  Post,  164 

Rapid  Transit  Commrs.,  Matter 

of,  10,  38,  71 

Rathbun  v.  State,  212 

Raymond,  Matter  of,  124 

Reagan  v.  Farmers  L.  &  T.  Co.,        62 
Read  v.  Amer.  Surety  Co.,  3il 

Reams  v.  Cooley,  52 

Redditt  v.  Wall,  338 

Redmon  v.  Chacey,  45 

Red  Wing  Sewer  P.  Co.  v.  Don- 
nelly, 331 
Reed  v.  Bd.  of  Education,  300 
V.  Anoka,                3,  68,  90,  172 
V.  Rackliffe  G.  C.  Co.,  128 
V.  Trenton,  193 
Rees  V.  Watertown,                          191 
Reeside  v.  United  States,     5, 132,  145 
Rehill  V.  Jersey  City,                 30,  68 
Reid  V.  Clay,                                   270 
V.  Pauly,                                    344 
Reilly  v.  Albany,  15 
Reno  W.,  etc.,  Co.  v.  Osburn,        163 
Rens  V.  Grand  Rapids,     212,  216, 

231,  263 
Reuting  v.  Titusville,  122 

Reynolds  v.  Stark  Co.  Commrs.,     76 
Rice  V.  Haywards,  147 

Richards  v.  Sch.  Tp.  of  Jackson, 

90,  98 

Richardson  v.  Crandall,  100 

V.  Scott's  Bluff  County,  99 

V.  Steuben  County,  326 

Richman  v.  New  York,  246 

Richmond  Co.  G.  L.  Co.  v.  Mid- 

dletown,  68,  80 

Ricker    v.    Chicago    San.    Dist., 

245,  246 
Ricketson  v.  Milwaukee,  113 

Riehl  V.  San  Jose,  143 

Rieser  Co.,  Inc.,  v.  New  York,       143 
Rigney  v.  New  York  C.  &  H.  R. 

Co.,  197 

Riley    v.     Brooklyn,     179,     189, 

195,  237,  318 
Ripley  v.  United  States,  251,  260,  261 
Ritchie  v.  State,  166 

Rittenhouse  v.  Baltimore,  313 

River  Rendering  Co.  v.  Behr,  69 


xlix 


TABLE   OF   CASES 


References  are  to  sections 


Riverside  Tp.  v.  Stewart,  21S 

Roanoke  v.  Blair,  171 

Roberts  v.  Bury  Imp.  Commrs., 

246 

V.  Fargo,  5,  11,  146 

Robertson  t*.  Omaha,  156 

Rochelle  v.  Evans  &  E.  F.  B.  Co.,  322 
Rochester  t'.  Campbell,  97,  101 

V.  Gutberlett,  69,  70 

Rochester  Ry.  Co.  v.  Rochester,        9 
Roehm  r.  Horst,  255,  304 

Roemheld  t-.  Chicago,  220 

Roettinger  r.  United  States,     163, 

246,  249,  273 
Rogers  r.  Burlington,  46 

V.  New  York,  224,  283 

Rork  I'.  Smith,  18 

Rose  V.  Baltimore,  76 

V.  Low,  115 

Rosenbaum,  Re,  113 

Ross  t'.  Long  Branch,  11 

V.  New  York,  261 

Rosser  v.  United  States,        247,  286 
Rowe  V.  Peabodv,     97,  158,  165, 

196^^  219,  292,  293,  321 
Rowland  v.  Gallatin,  110 

Royalton  v.  Royalton  &  W.  T. 

Co.,  174,  307 

Ruch  I'.  York,     252,  253,  254,  265 
Rumford  Dist.  v.  Wood,  17 

Russell  v.  Cordwent,  101 

V.  Iredell  County,  281 

V.  Sa  Da  Bandeira,  216 

Ryan  v.  Dubuque,  174 

V.  New  York,  161,  213 

r.  Paterson,  143 

Ryder  Bldg.  Co.  v.  Albany,  192,  240 


Sadler  v.  Eureka  County,  129 

Safety  Insulated  W.  &  C.  Co.  v. 

Baltimore,  143,  242 

Sage  V.  Hampe,  48,  49 

Saginaw  County  v.  Hubinger,  80 

Saginaw  G.  L.  Co.  v.  Saginaw,     1, 

6,  62,  70,  80 
St.  Charles  v.  Stookey,  262,  265,  281 
St.  George  Cont.  Co.  v.  New  York, 

277 


1 


St.  Joseph  County  Bd.  i'.  South 

Bend  &  M.  St.  Ry.  Co.,         293 
St.  Louis  t'.  Clemens,  208 

V.  Davidson,  59 

V.  Parker-Washington  Co.,     357 
t'.  St.  Louis  &  San  Francisco 

Co.,         170,  171,  174,  194 

V.  Wiggins  F.  Co.,  365 

V.  Wright  Cont.  Co.,  336 

r.  Von  Phul,  197,  325,  337 

St.    Louis    Hay    Co.    v.    United 

States,  102,  137 

St.  Paul  V.  Butler,  324 

I'.  St.  Paul  Ry.  Co.,  6 

V.  Laidler,  69 

St.  Paul,  etc.,  R.  Co.  i'.  United 

States,  209 

Salem  v.  Anson,         3,  357,  358,  361 
Saleno  v.  Neosho,  61 

Salsbury  v.  Phila.,  84,  111 

Salt  Creek  Tp.  v.  King  Iron  B.  & 

M.  Co.,  108 

Salt  Lake  City  v.  HoUister,  60 

V.  Smith,         170,  236,  239,  254 
Sampson  Co.  v.  Comm.,  331 

Sanborn  v.  United  States,  186 

San  Francisco  B.  Co.  v.  Dunbar- 

ton  L.  Co.,  287,  302 

San  Francisco  G.  Co.  v.  San  Fran- 
cisco, 17,  18,  111 
Sanitary  Dist.  v.  Blake  Mfg.  Co.,     61 
Sanitary     Dist.     of     Chicago     v. 

Ricker,  196 

Santa  Cruz  R.  P.  Co.  v.  Broderick,  121 
Santa  Rosa  Lighting  Co.  v.  Wood- 
ward, 143 
Satterlee  v.  United  States,     244, 

352,  360 
Sauer  v.  Sch.  Dist.  McKees  Rocks, 

272 
Saunders  v.  Iowa  City,  128 

Savannah  v.  Kelly,  46 

Schefbaurr  v.  Kearnev,     3,   121, 

122,  143 
Schenectady  v.  Union  College,  156 
Schieffelin  v.  New  York,  113,  134 
Schiffman  v.  St.  Paul,  142 

Schigley  v.  Waseca,  366 

Schipper  v.  Aurora,  59,  60,  61 

Schliess  v.  Grand  Rapids,     5, 261,  287 


TABLE   OF  CASES 


[  References  are  to  sections 


Schmidt  v.  North  Yakima,  261 

Schmulbach  v.  Caldwell,  360 

Schnaier  v.  Bradley  Cent.  Co.,  197 
Schneider  v.  Menasha,  32,  59 

Schneider  v.  United  States,  132 

School  Directors  v.  Roberson,  281 
School  District  v.  Dauchy,     292,  293 

V.  Hayne,  302 

V.  Randall,  263 

School  Dist.  ex  rel.  Koken  I.  Wks. 

V.  Livers,  325,  336,  340 

Schuchardt  v.  New  York,  323 

Schumm  v.  Seymour,  108,  112,  138 
Schopp  V.  St.  Louis,  40 

Scofield  V.  Council  Bluffs,  57 

Scofield  Co.,  Re,  344 

Scotland  County  v.  Hill,  172 

Scott  V.  Atchison,  167 

V.  LaPorte,  30,  45,  46 

V.  United  States,  93,  97 

Scott  Graff  Lumber  Co.  v.  Sch. 

Dist.,  346 

Scully  V.  United  States,  170,  261 
Seaboard  Nat.  Bank  v.  Woesten,  156 
Seagraves  v.  Alton,  84,  111 

Seaman  v.  New  York,  100,  108 

Searles  v.  Flora,  197,  326,  336,  337 
Sears  v.  Akron,  80 

Seaton  v.  Second  Municipality,  307 
Sedalia  v.  Smith,  156 

Sedgwick  Co.  v.  State,  55 

Seele  v.  Deering,  110 

Seibrecht  v.  New  Orleans,  111 

Seidlitz  v.  Auerbach,  354 

Seitzinger  v.  Tamaqua,  3 

Sells  V.  Chicago,  212 

Selpho  V.  Brooklyn,  120 

Semper    v.     Duffey,     119,     120, 

196,  237 
Seward  v.  Rochester,  152,     252 

Sewell  V.  Norris,  54 

Sewer  Comm.  v.  Sullivan,       246, 

249,  263,  299 
Sexton  V.  Chicago,     170,  172,  189, 

195,  196 

V.  Cook  County,  214 

Shank  v.  Smith,  156 

Shaw  V.  Trenton,  142 

Shawneetown  v.  Baker,  72 

Shea  V.  Milford,  164 


u 


Sherman  v.  Carr,  42,  43 

V.  Connor,  88  Tex.  35,  273 

72   S.    W.    (Tex. 

Civ.  App.)  238,  273 

Shields  v.  Durham,  366 

V.  New  York,  210,  220 

Shipman   v.   Dist.   of   Columbia, 

193,  212 
Shoenberger  v.  Elgin,  159,  287 

Shriner  v.  Craft,  165 

Sickels  V.  United  States,  293 

Sidney  Sch.  Furn.  Co.  v.  Warsaw 

Sch.  Dist.,  250 

Siegel  V.  Chicago,  128 

Silsby  Mfg.  Co.  v.  Allentown,         128 
Simermeyer  v.  Mayor,  150 

Simpson   v.   United   States,    172 
U.  S.,  372;  31  Ct.  CI.  217, 

88,  158,  195,  196 
V.  United  States,   199  U.  S. 
397,  179,  180 

Sinking  Fund  Cases,  81 

Skaneateles  W.  Co.  v.  Skaneateles,  80 
Skelsey  v.  United  States,  82,  172 

Skinner  v.  Harrison  Tp.,  47 

Skowhegan    W.    Co.    v.    Skow- 

hegan,  204,  273 

Slade  V.  Lexington,  88,  96 

Slattery  v.  Mayor,  237 

Smart  v.  Philadelphia,     138,  140,  143 

Smiley  v.  MacDonald,  69,  70 

Smith  V.  Albany,  99,  100 

V.  Bowman,  325 

V.  Brady,  263 

V.  Chicago  San.  Dist.,  163 

V.  Conway,  22 

V.  Copiah  County,        272,     357 

V.  Hubbell,  345 

V.  Mayor,  128 

V.  Nemaha  Co.  Sch.  Dist.,        84 

V.  Newburgh,  11 

V.  New  York,  88 

V.  Parkersburg    Bd.   of   Ed., 

163,  186,  254 
V.  Pleasant  PI.  Sch.  Dist.,  291 
V.  Rochester,  110 

V.  Russell,  281,  311 

V.  Salt  Lake  City,  163 

V.  Scott's  Ridge   Sch.  Dist., 

281,  300 


TABLE   OF   CASES 
[  References  are  to  sections  ] 


Smith  I'.  Syracuse,         113,  114,  128 
Smith  &  Co.  V.  Denver,  11 

Smith  Co.  V.  United  States,     352, 

357,  360 
Smith  Cont.  Co.  v.  New  York, 

162,  243,  249,  314 
Smithmeyer  v.  United  States,  128 
Smyth  V.  New  York,  197 

Snare  &  Triest  Co.  v.  U.  S.,  321 

Snipes  v.  Winston,  52 

Snow  V.  Deerfield  Tp.,  78 

Snow  Melting  Co.  v.  New  York,      84 
Snyder  v.  Mt.  Pulaski,  9 

V.  New  York,  209,  263 

Soley,  John  &  Sons  v.  Jones,  294 

Solon  V.  Williamsburgh  Sav. 

Bank,  15 

Somerset  v.  Smith,  10 

Somerset  Borough  v.  Ott,  253 

Soon  Hing  v.  Crowley,  7 

Soulard  v.  St.  Louis,  298 

South  Boston  Iron  Co.  v.  United 

States,  137 

Southern  Leasing  Co.  v.  Ludwig, 

149 
Southington   v,   Southington   W. 

Co.,  245,  293 

Spalding  v.  Peabody,  53,  68 

Spalding  County  v.  Chamberlin, 

201,  272 
Sparks  v.  Jasper  County,  114 

Spence  v.  Harvey,  20 

Spier  V.  Kalamazoo,  56 

Sprague  Elec.   Co.   v.   Hennepin 

County,  181 

Spring  Brook  W.  Co.  v.  Pittston     153 

Springfield  v.  Harris,         22,  92,  198 

V.  Schmook,  283 

Springfield  F.  &  M.  Co.  v.  Keese- 

ville,  68 

Standard  Boiler  Wks.  v.  National 

Surety  Co.,  331 

Stansbury  v.  Poindexter,  153 

Starin  i'.  United  States,  243 

Staples  V.  Somerville,  209 

Starkey  v.  Minneapolis,  138 

State  V.  Adams  County,  37 

V.  BlanchardCons.  Co.,  251 

V.  Bd.  of  Commrs.,  Dickinson 

Co.,  54 


State  V.  Bd.  of  Commrs.,  Douglas 

County,  118 
V.  Bd.  of  Commrs.,  Shawnee 

Co.,  128 
V.  Board  of  Fon  Du  Lac,        149 

V.  Clausen,  82 

V.  Collins,  204 

V.  Cornwell,  66 

V.  Cross,  99,  100 

V.  Davis,  73 

V.  Elizabeth,  50 

V.  Elting,  21,  100 

V.  Gates,  7 

V.  Great  Falls,  45,  249 

V.  Hays,  7 

V.  Heath,  82,  164 

V.  Helena,  52 

V.  Ironton  G.  Co.,  10 

V.  Illyes,  97 

V.  Johnson,  100 
V.  Leibes,                 151,  153,  325 

V.  Lincoln  County,  121 

V.  Long  Branch,  61 

V.  McCardy,  300 

V.  McGrath,  121,  I49 

V.  Mayor  of  Orange,  21,  22 

V.  Metcalfe,  100 

V.  Minden,  367 

V.  Moore,  61 

V.  Murphy,  53 

V.  New  Orleans,  I47 
V.  New    Orleans     &    C.    R. 

Co.,  185 

V.  Ohio  Penitentiary,  88 

V.  Ott,  69 

V.  Osawkee  Tp.,  37,  41 

V.  Paup,  90 

V.  Pullman,  53 

V.  Racine  Sattley  Co.,  96 

V.  Ritter,  82 
V.  St.  Paul  M.  &  M.  Ry.  Co.,  78 
V.  Sapulpa,              165,  168,  183 

V.  Scoggin,  200 

V.  Seattle,  42 

V.  Seattle  Elec.  Co.,  170 

V.  Williams,  99 

V.  Wilson,  55,  99 

V.  Woodward,  76 
State  Bd.  of  Agri.  v.  Cits  St.  R. 

Co.,  59,  108 


lii 


TABLE   OF   CASES 


References  are  to  sections  ] 


State,  Bradley  v.  Hammonton,        43 
State  ex  rel  v.  Hays,  12 

V.  Holcomb,  95 

r.  Toole,  142,  153,  154 

V.  Turner,  21 

V.  Webster,  325 

State  ex  rel  Atty.-Gen.  v.  Toledo, 

24,  25,  29 
Bartelt  v.  Liebes,  151,  153,  325 
Belt  V.  St.  Louis,  9,  71 

Clough  V.  Shelby  County,       150 
Crow  V.  St.  Louis,   169  Mo. 

31;68S.  W.  900,  3 

V.  St.  Louis,   174   Mo.  125; 

73  S.  W.  623,  43 

Ellis  V.  Tampa  W.  Wks.  Co., 

68,  192 
Hicks  V.  Stevens,  57 

Henderson  v.   Bd.    of    State 

Prison  Comm.,         84,  89,  93 
Hoxey  v.  Paterson,  74 

Keith «;.  Comm.  Council,  16,  187 
Laskey  v.  Perrysburg  Bd.  of 

Ed.,  55,  99 

Manhattan    Const.    Co.    v. 

Barnes,  35 

Morris  v.  Clark,  61 

People  L.  Co.  v.  Holt,  147 

St.  Paul  V.  Minnesota  Trans. 

Co.,  9,  10,  58,  78 

South     Bend     v.     Mountain 

Spring  Co.,  93,  199,  202 

Toledo  V.  Lynch,  26,  29,  32 

Townsend   v.    Bd.    of    Park 

Comm.,  9 

Walton  V.  Hermann,  147 

Woodruff  &  Co.  V.  Bartley,    330 

Xenia  M.  Co.  v.  Licking  Co.,  150 

State  Treas.  v.  Cross,  20 

State  Trust  Co.  v.  Duluth,  11 

Stebbins  v.  Perry  County,  60 

Steffen  v.  St.  Louis,  214 

Stegmaier  v.  Goeringer,  79 

Stemmler  v.  New  York,  42 

Stephens     v.     Essex     Co.     Pk. 

Commrs.,        163,  286,  352,  360 
Stephenson  v.  Moimiouth  Min.  & 

Mfg.  Co.,  328,  345 

Sterling  v.  Hurd,  170,  271 

V.  Wolf,  326,  337 


Stetson  V.  Kempton,  79 

Stevens  v.  United  States,  132 

Stewart  v.  Council  Bluffs,  44 

V.  State,  245 

Stilson  V.  Lawrence  County,     20,  21 
Stivers  v.  Cherryvale,  141 

Stock  V.  Boston,  68 

Stockdale  v.  Sch.  Dist.,  57 

Stone  V.  Mississippi,  9 

V.  Prescott  Spec.  Sch.  Dist.,     93 
Stone  Sand  &  Gravel  Co.  v.  U.  S., 

349,  350,  352 
Storm  V.  United  States,  95 

Stotts  V.  Fairfield,  248 

Stover  V.  Springfield,  193,  194 

Straw  V.  Temple,  165 

Strobel  Steel  Cons.  Co.  v.  Chicago 

San.  Dist.,  240,  362 

Stuart  V.  Cambridge,  214,  216 

Sturges  V.  Crowinshield,  82 

Sugar  V.  Monroe,  29,  30,  39,  40 

Sullivan  v.  Pres.  Sing  Sing,  225 

Summertown  v.  Hanson,  327 

Summit  v.  Morris  County  T.  Co., 

352,  356 
Sundstrom  v.  State,  195 

Sun  Print  &  Pub.  Ass'n  v.  Mayor 

of  New  York,  24,  38,  42 

Superior  v.  Douglas  County  Tel. 

Co.,  96 

Supervisors,  Bd.  of,  v.  Ellis,  67 

Sutherland-Innes   Co.    v.    Evart, 

37,  45 
Swanson  v.  Ottumwa,  58 

Swanton  v.  Highgate,  30 

Sweeney  v.  United  States,     257,  259 
Swift  V.  Falmouth,  53 

V.  New  York,  83  N.  Y.  528; 

105,  128,  130 

V.  New  York,  89  N.  Y.  52,     263 

V.  St.  Louis,  114,  128 

V.  United  States,  163 

Syracuse  W.  Co.  v.  Syracuse,    68,  70 


Taber  v.  Dallas  County,  95 

V.  Ferguson,  209 

Taft  V.  Montague,  300 

V.  Town  of  Pittsford,  5 


liii 


TABLE   OF   CASES 


References  are  to  sections  ] 


Talbot  Pav.  Co.  v.  Detroit,  91 

Mich.  262;  51  N.  W.  933,       147 

f.  Detroit,  109  Mich.  657;  67 

N.  W.  979,         14,  148,  149 

Talcott  I'.  Buffalo,  121,  122 

Tash  V.  Adams,  79 

Tatham  i-.  Philadelphia,  79 

Taylor  v.  Dist.  of  Columbia,  192 

t).  Lambertville,      102,  164,  166 

V.  New  Castle  County,  243 

V.  New  York,  247,  316 

V.  Ross  County,  38 

V.  Spencer,  313 

Tecumseh  v.  Burns,  170,  201 

Tempe  v.  Corbell,  10 

Tempel  v.  United  States,  109 

Templeton  v.  Nipper,  345 

Tennant  v.  Crocker,  146 

Terre  Haute  v.  Lake,  163,  166 

Terrell  v.  Strong,  143 

Terry  v.  Richmond,  338 

Texas  Cement  Co.  v.  McCord,      333 

Thileman  v.  New  York,    224, 232, 

283 
Thomas  v.  Pt.  Huron,  53 

V.  Richmond,  58 

Thomas  &  DriscoU  v.  U.  S.,  231 

Thompson  v.  Indep.  Sch.  Dist.,       57 
V.  St.  Charles  County,     90, 
348,  352,353, 
355, 356, 357, 360 
V.  Schermerhorn,  4,  9 

V.  United  States,  3  Ct.  CI. 

433,  118 

V.  United  States  9  Ct.  CI.  187, 145 
Thorn  v.  Mayor,  159,  287 

Thomdike  v.  Camden,  43 

Thrift  V.  Bd.  of  Commrs.  of  Eliza- 
beth City,  70 
Tiede  v.  Schneidt,  69 
Tift  V.  Buffalo,  113,  114 
Tilley  v.  County  of  Cook,  93 
Tingue  v.  Port  Chester,  135 
Titcomb  v.  United  States,  84 
Title  G.  &.  T.  Co.  v.  Crane  Co.,  332 
Titusville  Iron  Co.  v.  New  York,  322 
Toma.sek  v.  Edwardsville,  194 
Tomlinson  v.  Hopkins  County,  174 
Tompkins  v.  Dudley,     195,  200, 

274,  293,  311 


Toomey  v.  Bridgeport,  91,  146 

Tousey  v.  Indianapolis,  128 

Townsend  v.  Hoyle,  22 

Trapp  t'.  Newport,  147 

Traveler  Ins.  Co.  v.  Johnson  City,  60 
Trenton    v.    Bennett,     195,    200, 

237,  274,  292,  293 
Trenton  Co.  v.  United  States,  146 
Trist  V.  ChUd,  48,  49 

Troy  Water  Co.  v.  Troy,  6 

Trustees  of  Ex.  F.  Ben.  Fund  v. 

Roome,  42 

Turner  v.  Cruzen,  59,  64 

V.  Fremont,  170,  359 

V.  Grand  Rapids,  231 

Turney  v.  Bridgeport,    5,  11,  56,  96 

Twiss  V.  Pt.  Huron,  150 

U 

Underground  R.  Co.  v.  New  York,  38 
UnderhiU  v.  Rutland  R.  R.  Co.,  83 
Union    Bank    of    Richmond  v. 

Commrs.  of  Oxford,  73 

Union    Sheet    Metal    Wks.    v. 

Dodge,  325 

United  Eng.,  etc.,  Co.  v.  U.  S.,  353 
United  R.  R.  v.  San  Francisco, 

6,  68,  70 
United  States  v.  Andrews  &  Co.,  137 
V.    Atlantic    Coast   Line   R. 

Co.,  170 

V.  Atlantic  Dredg.  Co.,     158, 

178,  195,  196,  232 
V.  Axman,  150,  321 

V.  Barlow,  220,  261 

V.    Behan,     242,    298,     304, 

305,  308,  311,  313 
V.  Berdan  Mfg.  Co.,  84 

V.  Bethlehem  Steel  Co.,     170, 

179,  348,  357 
V.  Bostwick,  82,  86 

V.  Bradley,  55,  82,  99 

V.  Buffalo  Pitts  Co.,     109,  322 
V.  Carlin  Con.  Co.,     84,  88, 

89,  93,  137 
V.  Cen.  Pac.  R.  Co.,  81, 174, 187 
V.  Charles,  94 

V.  Cooke,     90,  91,  97,  165,  263 
V.  Cress,  109 


Hv 


TABLE   OF   CASES 


[  References  axe  to  sections  ] 


United  States  v.  Dieckerhoff,         361 
V.  Dietrich,  172,  191,  290 

V.  Ellicott,     91,  93,  96,  177,  186 
V.  Farley,  209 

V.  Gibbons,  196,  211,  224 

V.  Gleason,  293 

V.  Great  Falls  Mfg.  Co.,  109, 

364 
V.  Grossmayer  65 

V.  Guerber  163 

V.  Hodson,  99 

V.  Hurley,  263 

V.  Jack,  268,  332 

V.  Lamont,  137 

V.  Lewis,  292 

V.  Lynah,  109,  364 

V.  McDougall,  146 

V.  McMuUen,     91,    95,    96, 

151,  160,  162,  163,  308 
V.  Milliken  Imprinting  Co.,  119 
V.  Montell,  358 

V.  Mora,  99 

V.  Mueller,  284 

V.  Nat.  Surety  Co.,  340 

t;.N.Y.&P.R.S.S.Co.  137 

V.  Norris,  248 

V.  O'Brien,  249,  308,  314 

V.  Old  Settlers,  7,  79 

V.  Palmer,  109 

V.  Peck,  298 

V.  Price,  198 

V.  Purcell  Envelope  Co.,     85, 
126, 136, 137, 184, 

304,305,  307,  308 
V.  Realty  Co.,  90,  154 

V.  Richards,  82 

V.  Ross,  111 

V.  Rubin,  363,  364 

V.  Russell,  364 

V.  Smith,  94  U.  S.  214,  313 

256   U.   S.    11,    158, 
178,    192,    196,  226, 

232,  239,  255 
V.  Smoot,  289,  291,  306 

V.    Spearin,     158,    159,    178, 

195,  196,  226,  232 
V.  Speed,  132 

V.  State  Nat.  Bank,  104 

V.  Stow,  43 

V.  Tingey  82 


Iv 


United  States  v.  United  Eng.  Co., 

283,  284,  298,  353,  360,  362 
V.  U.  S.  Fid.  &  G.  Co.,     274, 

311,  321 

V.  Utah,  etc..  Stage  Co.,         196 

V.  Walsh,  271,  300 

V.  Worraer,  291 

United  States  Compiled  Statutes, 

(Sec.  6647),  5,  45 

(Sec.  6763),  5 

(Sec.  6895),  145 

(Sec.  6890),  209 

United  States  Elec,  etc.,  Co.   v. 

Big  Rapids,  163,  250 

United  States  Fid.  Co.  v.  Bart- 

lett,  332 

United  States  Fid.  &  G.  Co.  v. 
American  Blower  Co.,  340 

V.  Bd.  of  Commrs.  of  Wood- 
son Co.,  170 
V.  United  States,                      326 
United    States    Gypsum    Co.    v. 

Gleason,  325,  336 

United  States  Rev.  Statute, 

(Sec.  3709),  137 

(Sec.  3737),  209 

(Sec.  3744),  137,  145 

(Sec.  3747),  137 

United   States   T.   G.   Company 

V.  Brown,  99 

United  States  Trust  Co.  v.  Guth- 
rie Center,  199 
United    States,    use   of   Croll   v. 

Jack,  335 

United  States  use  of  Hill  v.  Amer. 

Surety  Co.,  326,  336 

United  States  use  of  Lyman 
Coal  Co.  V.  U.  S.  F.  &  G. 
Co.,  332 

United    States    use   of    Vermont 

Marble  Co.  v.  Burgdorf,         336 
United   States   Water   Works   v. 

DuBois,  249 

United  States  Wood  Preserv.  Co. 

V.  New  York,  210 

Urbany  v.  City  of  Carroll,  177 

Utica  Water  Wks.  Co.  v.  Utica,       68 

Uvalde  Asph.  P.  Co.  v.  New  York, 

128  App.  Div.  210;  198  N.  Y. 

548,  56,  201 


TABLE   OF   CASES 


References  are  to  sections 


Uvalde  Asph.  P.  Co.  v.  New  York, 
154  App.  Div.  112;  211  N.  Y. 
560,  211,  231 

Uvalde  Cent.  Co.  v.  New  York, 

263,  266 


Valparaiso  v.  Gardner,  7,  10 

r.  Valparaiso  City  W.  Co.,         56 
Van  Brocklin  v.  Tennessee,  364 

Van  Buskirk  v.  Bd.  of  Education 

Passaic  Tp.,  217,  218,  360 

Vandalia  R.  Co.  v.  State,  9 

Vanderbilt  v.  Schreyer,  97 

Van  Dolsen  v.  Bd.  of  Education, 

11,  15,  146 
Van  Reipen  v.  Jersey  City,  116,  142 
Venice  v.  Murdock,  46 

Verdin  v.  St.  Louis,  128 

Vermont  Marble  Co.  v.  Burgdorf,  336 
Vicksburg  W.  Co.  v.  Vicksburg,  74 
Vidal  V.  Philadelphia,  47 

Vincennes  v.  Cits.  G.  L.  Co.,     10, 

82,  164,  172 
Vincent  v.  Ellis,  330 

Virginia  v.  West  Virginia,  170 

Virginia  City  Gas  Co.  v.  Virginia 

City,  82,  111 

Vito  V.  Simsbury,  108 

Voght  V.  Buffalo,  164 

Von  Hoffman  v.  Quincy,  191 

Von  Schmidt  v.  Widber,  164 

Vulcanite    Pav.     Co.     v.    Phila- 
delphia, 178 

W 

Wabash  R.  Co.  v.  Defiance,  9 

Waco  V.  Chamberlain,  143 

Waddy,  People  ex  rel  v.  Partridge,  42 
Wade  V.  Brantford,  291 

Wadsworth  v.  Bd.  of  Supervisors, 

97,  101,  107,  143 
Wagner  v.  Rock  Island,  68 

Wahl  V.  Milwaukee,  11 

Wakefield  Cons.  Co.  v.  New  York, 

7,  161,  162,  243,  249,  299,  314 
Walker  v.  Cincinnati,  38 

V.  Jameson,  69 


Walker  v.  United  States,  193 

Walla  Walla  City  v.  WaUa  Walla 

W.  Co.,  10,  280 

Walla   Walla   W.    Co.   v.   Walla 

Walla  City,  6 

Wallis  V.  Wenham,  283 

Walsh  V.  Columbus,  11,  131 

V.  Mayor,  123,  147 

Walsh   Const.    Co.   v.   Cleveland 

261,  281 
Walter  v.  McCleUan,  113,  143 

Walton  V.  Mayor,  121,  130,  146 

Ward  V.  Barnum  67 

V.  Forest  Grove,  59 

V.  Hudson  R.  B.  Co.,  354 

V.  Kropf  83,  104,  108,  279 

Warren  v.  Barber  A.  P.  Co.,  143 

Warren  Bros.  Co.  v.  New  York, 

115,  128,  133 
Warren  County  v.  Patterson,  76 

Warrenscharf   A.    P.    Co.   v.   St. 

Paul,  185 

Wasco  County  v.  New  England 

Equit.  Ins.  Co.,  340,  344 

Washburn  v.  Shelby  County 

Commrs.,  132 

Washburn  County  v.  Thompson,  73 
Washington  County  v.  Williams,  304 
Waterbury  v.  Laredo,  10 

Waterloo  W.  Mfg.  Co.  v.  Shana- 

han,  7,  42,  79 

Water  Commrs.,  Bd.  of,  v. 

Commrs.,  146 

;;.  Robbins,   90,  98,  195,  196, 

245 
Watson  V.  DeWitt  Co.,  246,  249 

V.  Needham,  68 

Watterson  v.  Mayor  of  Nashville,  138 
Wayne  Co.  v.  Reynolds,  67 

Webb  Co.  G.  A.  v.  Trustees  Mor- 

gantown  Sch.  250 

Webb  Granite  Co.  v.  Worcester, 

3,  291 
Weeks  v.  United  States,  246 

Weismer  v.  Douglas,  37- 

Weitz  V.  Des  Moines,  5,  121 

Welch  V.  McNeil,  323 

Welles  V.  Portuguese  Am.  Bk.,  209 
Wells  V.  Burnham,  113 

V.  Raymond,  142 


Ivi 


TABLE   OF   CASES 


References  are  to  sections 


WeUs  V.  Salina,  58,  77 

v.  West  Bay  Bd.  of  Ed.,  249,  321 
Wells  Bros.  v.  U.  S.,  161 

Wellston   V.    Morgan,     2,    5,    17, 

108,  112 
West  V.  Bechtel,  306 

Westbrook  v.  Deering,  79 

West  Cambridge  v.  Lexington,       100 
West  Chicago  Park  Commrs.  v. 

Carmody,  295 

V.  Kincade,  212,  215 

Westerly  Waterworks  Co.  v.West- 

erly,  6 

Western  Sav.  Fund  Soc.  v.  Phila- 
delphia, 164 
Westminster   W.    Co.    v.    West- 
minster,  9, 10,  58, 68, 70, 80,  206 
Weston  V.  Syracuse,                   7,  164 
Wheaton    Bldg.    Co.    v.    Boston, 

84,  90,  91,  93,  98,  359 
Wheeler  v.  Poplar  Bluff,  108 

V.  Sault  Ste.  Marie,  3,  44 

Wheelock  v.  Lowell,  35,  39,  40 

Wheless  v.  St.  Louis,  283 

White   V.    Braddock    Sch.    Dist., 

281,  283,  352 

V.  Meadville,  6,  80 

V.  New  Orleans,  222 

V.  Stamford,  40 

White  exr's.  v.  Commonwealth,     208 

Whiteman  v.  Mayor,  261 

Whitehouse  v.  Am.  Surety  Co.,       341 

Whiteside  v.  United  States,       12,  82 

Whiting  V.  New  Baltimore,  360 

Wichita  Water  Co.  v.  Wichita,        68 

Wickwire  v.  Elkhart,  142 

Wight  V.  Chicago,  362 

W^ilcox  Lumber  Co.  v.  Sch.  Dist.,  346 

Wilder  v.  United  States,  145 

Wildey  v.  Fractional  Sch.  Dist., 

261,  263,  265,  300 

Wilds  V.  Bd.  of  Education,    320,  322 

Wiley  V.  Athol,      203,  204,  287,  301 

Wilkes  County  v.  CaU,  80 

Wilkins  v.  Detroit,  113,  114 

Williams  v.  Bergin,  116 

Williams  v.  Bd.  of  Garden  Bottom 

L.  Dist.,  254 

V.  Gallatin,  40 

V.  iVIarkland,  325,  326,  336 


Williams  v.  New  York,  192  N.  Y. 
541,    5,  123,  124,  143,  146,  188 
V.  New  York,  130  N.  Y.  App. 

Div.  182  302 

V.  United  States,  150,  249 

V.  Williams,  47 

Williamson  v.  New  Jersey,  80 

Willington  v.  West  Boylston,    292, 

295 
Willoughby  v.  City  Council,  16 

WUlson  V.  Baltimore,     120,  348, 

353,  354,  357,  359 
Wilmington  v.  Bryan,  10 

Wilson  V.  CoUingswood,  113 

V.  Mitchell,  110 

V.  Rochester,  6 

V.  Trenton,  156 

V.  Whitmore,    324,  326,  334, 

336 
Winamac  Sch.  Town  v.  Hess,     57, 

310,  322 
Winchester  v.  Redmond,  5,  58 

Windsor  v.  Des  Moines,  114 

Winkle  T.  Co.  v.  Cotteral,  335 

Winpenny  v.  French,  48 

Winston  v.  Pittsfield,  360 

Winter  v.  Niagara  Falls,  366 

Wisconsin  Cent.  R.  Co.  v.  United 

States,  11 

Wise  V.  United  States,  348 

Wisner  v.  McBride,  20,  100 

Witt  V.  Mayor,  106,  110 

Wolf  V.  Humboldt  County,  101 

Wood  V.  Fort  Wayne,     214,  220, 

232,  284 

V.  Seattle,  7 

V.  United  States,  298 

Woods  V.  Ayres,  HI 

Woodward    v.    Livermore    Falls 

W.  Dist.,  68 

Woodward  Lumber  Co.  v.  Grant- 

ville,  346 

Worcester  v.  Eaton,  75 

V.  Worcester  St.  Ry.  Co.,  9 

Worden  v.  New  Bedford,    29,  30,  40 
Worell  Mfg.  Co.  v.  Ashland,  108 

Wormstead  v.  Lynn,  11,  15,  17,  215 
Worthington  v.  Boston,  115 

Wright  V.  Tacoma,  165 

Wrought  Iron  B.  Co.  v.  Attica,  42 


Ivii 


TABLE   OF   CASES 
[  References  are  to  sections  ] 


Z 


Yamoldr.  Lawrence,    115,  127,  147  Zable  «.  LouisviUe  Bap.  Orphan    ^ 

Sr  Y^:  Co.,           316,  358  Zipp^SS.  &  D^  Co.,                    331 

Youngf.  Chicopee,        199,  200,  293  Zottman  ..  San  Francisco,     5,^52,^^^ 

V.  Y'oung,                                 325  » 


Iviii 


A  TREATISE  ON  THE  LAW  OF 
PUBLIC  CONTRACTS 

PART  I.    THE  POWER  TO  CONTRACT 
CHAPTER  I 

KINDS  OF  POWERS 

§  1.  Inherent  Power. 

The  nation  and  the  State  being  sovereigns  have  inherent 
power  to  contract,  but  that  attribute  cannot  strictly  be 
said  to  exist  in  the  pohtical  subdivisions  of  the  State  which 
are  called  municipal  corporations.  Inherent  power  embodies 
the  idea  of  permanence  and  inseparableness.  Political 
subdivisions  possess  no  power  to  contract.  If  this  power 
inhered  in  them  as  accident  does  in  substance  the  exercise 
of  what  was  inherent  could  not  be  denied.  While  many 
authorities  declare  that  since  political  subdivisions  of  the 
State  are  bodies  corporate  and  politic,  they,  therefore, 
possess  and  enjoy  the  same  powers  which  private  corpora- 
tions possess  and  enjoy,  ^  it  might  more  appropriately  be 
said  that  such  power  is  implied  from  the  grant  of  other 
powers  as  the  only  suitable  and  available  means  of  giving 
expression  to  or  carrying  out  those  powers.  The  true  rule 
seems  to  be  that  municipalities  must  receive  their  powers 
by  express  grant,  or  by  necessary  implication  from  such 
express  grant,  and  that  they  accordingly  derive  their  sole 

1  Portland  Lumbering  Co.  v.  East  Portland,  18  Oreg.  21,  22  Pac.  536;  East 
Tenn.  Univ.  v.  Knoxville,  6  Baxt.  (Tenn.)  166;  Crawfordsville  v.  Braden, 
130  Ind.  149,  28  N.  E.  849. 

1 


§  1  ]  THE  POWER  TO  CONTRACT         [  PART  I 

source  of  power  from  legislative  enactment.^  Municipalities 
and  political  subdiWsions  generally  can  exercise  only  such 
power  to  contract  as  is  expressly  conferred  or  necessarily 
implied  from  or  incident  to  the  power  expressly  conferred 
or  such  power  as  is  essential  to  the  carrying  out  of  the 
declared  objects  and  purposes.-  Where,  therefore,  the 
power  is  sought  to  be  derived,  because  not  express,  it  is 
rather  implied  in  and  incidental  to  express  powers  and 
purposes,  than  inherent  in  the  corporation.  The  State  has 
the  power  to  prohibit  municipalities  from  contracting  and 
it  may  indeed  provide  another  agency  to  make  contracts 
for  them.  As  matter  of  instance,  the  State  in  the  case  of 
the  City  of  New  York  has  provided  a  separate  State  agency 
which  makes  all  subway  contracts  and  leaves  the  city  to 
appropriate  the  money  to  pay  the  bills  which  the  Public 
Ser\'ice  Commission  contracts.^ 

§  2,  Express  Power. 

The  express  powers  of  a  municipality  and  particularly 
its  power  to  contract,  are  usually  set  out  in  the  charter 
granted  to  it  by  the  State,  or  in  the  laws  regulating  the 
particular  class  of  municipalities  to  which  it  belongs  or  in 
the  general  municipal  or  county  law,  although  some  in- 
stances may  be  cited  where  rights  and  powers  of  munici- 
palities are  to  be  found  in  special  acts.  The  powers  of  the 
State  and  of  the  nation  to  contract  are  as  absolute  as  sover- 

1  Brooklyn  City  R.  Co.  v.  Whalen,  191  App.  Div.  737,  229  N.  Y.  570,  128 
N.  E.  215;  Detroit  Cits.  St.  Ry.  Co.  v.  Detroit,  110  Mich.  384,  68  N.  W.  304, 
171  U.  S.  48,  43  L.  Ed.  67;  Saginaw  G.  L.  Co.  v.  Saginaw,  28  Fed.  529;  Detroit 
Cits.  S.  R.  Co.  V.  Detroit,  64  Fed.  628;  Long  v.  Duluth,  49  Minn.  280,  51  N.  W. 
915;  Parkhurst  v.  Salem,  23  Oreg.  471,  32  Pac.  304;  Ketchum  v.  Buffalo,  14 
N.  Y.  356. 

2  Detroit  Cits.  St.  Ry.  Co.  v.  Detroit,  supra. 

'  Chap.  4,  Laws  of  1891  of  New  York;  Chap.  429,  Laws  of  1907  of  New 
York;  Chap.  134,  Laws  of  1921  of  New  York;  Matter  of  McAneny,  198  N.  Y. 
App.  Div.  205,  aff'd  232  N.  Y.  377. 

2 


CHAP.  I  ]  KINDS  OF   POWERS  [  §  3 

eignty.  These  powers,  however,  are  usually  delegated  to 
boards,  departments,  agencies  and  officers  and  when  so 
delegated,  can  only  be  exercised  as  granted,  the  same  as  in 
the  case  of  municipalities.  But  the  enumeration  of  express 
powers  in  a  statute,  including  a  portion  of  such  powers  as  are 
usually  implied  from  powers  granted,  will  not  necessarily 
operate  as  a  limitation  of  corporate  powers,  and  exclude 
those  not  enumerated,  ^  although  where  a  statute  by  specific 
provisions,  and  extended  detailed  statement  provides  the 
manner  and  the  only  manner  in  which  contracts  may  be 
made,  this  excludes  any  implied  power  to  contract  and  all 
liability  on  contract  can  only  be  express.  ^ 

§  3.  Implied  Power. 

Public  bodies  authorized  to  do  a  particular  act  have 
with  respect  to  such  act  the  power  to  make  all  contracts 
which  natural  persons  might  make.^  They  have  all  the 
powers  possessed  by  natural  persons,  as  respects  their 
contracts,  except  when  they  are  expressly,  or  by  necessary 
implication,  restricted.''  A  public  body  may  accordingly 
provide  in  its  contract  to  purchase  on  credit,  and  issue  its 
non-negotiable  notes  in  payment.'^  But  it  has  no  implied 
power  to  borrow  money  for  corporate  purposes.^ 

Where,  therefore,  public  bodies  have  certain  powers  ex- 
pressly granted  to  them  or  certain  duties  imposed  upon 
them,  in  the  absence  of  legal  restrictions,  they  possess  the 
implied  power  to  enter  into  such  contracts  as  are  necessary 

1  Galena  v.  Corwith,  48  111.  423,  425;  Crawfordsville  v.  Braden,  130  Ind. 
149,  28  N.  E.  849. 

2  Wellston  V.  Morgan,  65  Ohio  St.  219,  62  N.  E.  127. 

3  Ketchum  v.  Buffalo,  14  N.  Y.  356. 

4  Galena  v.   Corwith,  48  111.  423. 

s  Ketchum  v.  Buffalo,  supra;  Galena  v.  Corwith,  supra;  Douglass  v.  Mayor 
of  Virginia  City,  5  Nev.  147. 
« Luther  v.  Wheeler,  73  S.  C.  83,  52  S.  E.  874. 

3 


§  3  ]  THE  POWER  TO  CONTRACT         [  PART  I 

to  carry  out  the  express  powers  and  obligations  imposed 
upon  them.^  It  is  generally  accepted  that  public  bodies 
have  the  implied  power  to  contract  for  things  which  are 
essential  to  the  proper  management  of  modern  communities 
and  which  are  considered  to  be  in  the  general  public  interest 
and  for  the  general  public  welfare,  such  as  sanitary  measures, 
the  construction  of  streets  and  sidewalks, ^  and  their  repair,' 
the  lighting  of  streets,'*  and  the  construction  of  sewers  and 
this  power  to  contract  will  readily  be  inferred  from  general 
powers  to  maintain  such  works,  under  a  liberal  interpretation 
of  powers  granted  for  public  purposes.  The  power  to  build 
a  sewer,  therefore,  implies  the  power  to  contract  to  build 
it.^  The  power  to  provide  water  and  lighting  confers  the 
power  to  enter  into  contracts  with  individuals  for  these 
purposes.®  The  power  to  erect  waterworks  grants  by  im- 
plication the  right  to  repay  those  who  made  connections 
with  it  the  amount  expended  in  so  doing.^  The  power  to 
provide  sewers  confers  the  power  to  contract  for  sewage 
disposal  outside  of  the  city,^  and  likewise  authority  to  buy 
a  right  of  way.^  The  power  to  abate  nuisances  gives  power 
to  remove  garbage  beyond  city  limits.^"  And  of  course,  in 
each  instance  cited,  the  power  to  contract  with  reference 
to  the  power-conferred,  arises. 

1  Reed  v.  Anoka,  85  Minn.  294,  88  N.  W.  981;  Cunningham  v.  Cleveland,  98 
Fed.  657;  Los  Angeles  W.  Co.  v.  Los  Angeles,  88  Fed.  720,  730;  Douglass  v. 
Virginia  City,  supra;  Greenville  v.  Greenville  W.  Co.,  125  Ala.  625,  27  So.  764; 
Webb  G.  Co.  v.  Worcester,  187  Mass.  385,  73  N.  E.  639;  Schefbauer  v.  Kearney, 
57  N.  J.  L.  588,  31  Atl.  454. 

2  Jones  V.  Camden,  44  S.  C.  319,  23  S.  E.  141. 

3  Seitzinger  v.  Tamaqua,  187  Pa.  St.  539,  41  Atl.  454. 

*  Fawcett  v.  Mt.  Airy,  134  N.  C.  125,  45  S.  E.  1029;  Crawfordsville  v.  Braden, 
130  Ind.  149,  28  N.  E.  849;  Mauldin  v.  Greenville,  33  S.  C.  1,  11  S.  E.  434. 

6  Jones  V.  Holzapfel,  11  Okla.  405,  68  Pac.  511. 
«  Reed  v.  Anoka,  85  Minn.  294,  88  N.  W.  981. 

7  State  ex  rel.  Crow  v.  St.  Louis,  169  Mo.  31,  68  S.  W.  900. 

8  McBean  v.  Fresno,  112  Cal.  159,  44  Pac.  358,  31  L.  R.  A.  794. 

9  Coit  V.  Grand  Rapids,  115  Mich.  493,  73  N.  W.  811. 
»o  KeUey  v.  BroadweU,  3  Neb.  617,  92  N.  W.  643. 

4 


CHAP.  I  ]  KINDS   OF   POWER  [  §  3 

But  the  power  to  tax  does  not  confer  authority  to  con- 
tract to  pay  one-half  of  the  taxes  obtained  from  disclosing 
to  the  public  officials  certain  unassessed  personal  property 
belonging  to  residents  liable  to  be  assessed.^  Nor  can  a 
public  body  spell  out  the  right  to  engage  in  the  business  of 
plumbing  from  a  grant  of  power  to  erect  waterworks.  ^  It 
has  no  implied  power  to  contract  to  move  improvements 
affected  by  the  widening  of  a  street,  as  it  may  not  assume 
the  risk  of  possible  collapse  and  incident  injury  to  persons, 
and  because  it  has  power  to  acquire  property  for  the  purpose 
of  widening  a  street  will  not  authorize  it  to  agree  to  move 
back  a  building  affected  and  restore  it  to  its  former  con- 
dition in  consideration  of  dedication  of  the  land  needed 
for  the  widening.  3  Again,  authority  to  sell  bonds  will  not 
empower  a  municipaUty,  by  implication,  to  settle  a  claim 
for  breach  of  a  contract  to  sell  bonds.''  The  power  to  con- 
tract carries  with  its  exercise  the  power  to  insert  and  im- 
pose reasonable  restrictions  in  the  contract.^  Where  a  public 
body  has  power  to  grant  a  franchise  upon  such  terms  and 
conditions  as  it  may  prescribe,  it  may  impose  such  reason- 
able conditions  precedent  or  subsequent  as  it  may  consider 
necessary  or  proper  including  the  requirement  that  the 
grantee  of  the  franchise  shall  give  a  bond  conditioned  for 
the  speedy  erection  of  the  plant  by  which  the  franchise  is 
to  be  exercised.^  It  may  grant  a  franchise  on  condition 
that  the  rate  of  fare  be  not  increased,  when  authorized. 

» Grannis  v.  Blue  Earth  Co.,  81  Minn.  55,  83  N.  W.  495. 

2  Keen  v.  Waycross,  101  Ga.  588,  29  S.  E.  42. 

2  Wheeler  v.  Sault  Ste.  Marie,  164  Mich.  338,  129  N.  W.  685,  35  L.  R.  A. 
N.  s.  547. 

« Ft.  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E.  973. 

5  Salem  v.  Anson,  40  Oreg.  339,  67  Pac.  190,  56  L.  R.  A.  169;  D.,  L.  &  W.  R. 
Co.  V.  Oswego,  92  N.  Y.  App.  Div.  551;  Phoenix  v.  Gannon,  195  N.  Y.  471, 
88  N.  E.  1066;  Knapp  v.  Swaney,  56  Mich.  345,  23  N.  W.  162;  Capital  City 
B.  &  P.  Co.  V.  Des  Moines,  136  Iowa,  243,  113  N.  W.  835;  New  York  v.  Union 
News  Co.,  222  N.  Y.  263,  118  N.  E.  635.  ^  Salem  v.  Anson,  supra. 

5 


CHAPTER  II 

WHERE  POWER  LODGED — LIMITATIONS  ON  AND 
EXHAUSTION  OF  POWER 

§  4.  Who  Possesses  Power. 

The  general  powers  conferred  upon  municipahties  exist 
in  the  common  council,  board  of  aldermen,  board  of 
superxdsors  or  other  similar  governing  body,  except  when 
delegated  by  charter  or  statute  to  some  other  body  or 
official,  and  persons  deahng  with  these  public  bodies,  in 
respect  to  a  matter  within  the  scope  of  its  general  powers, 
need  not  go  behind  the  doings  of  such  general  governing 
body,  apparently  regular,  to  inquire  after  preliminary  or 
extrinsic  irregularities.^ 

But  where  these  powers  are  devolved  by  law  upon  the 
governing  body  to  make  contracts  for  purposes  designated 
in  the  statute,  the  general  and  precise  authority  conferred 
upon  it  may  not  in  toto  be  delegated  to  others.^  The 
governing  body  cannot  in  any  case  delegate  to  a  member 
or  committee  functions  or  prerogatives  of  a  legislative 
character,  or  involving  the  exercise  of  judgment  and  dis- 
cretion,^ although  merely  ministerial  functions  may  be  so 
delegated."* 

1  Moore  v.  Mayor  of  New  York,  73  N.  Y.  238, 29  Am.  R.  134. 

2  Birdsall  v.  Clark,  73  N.  Y.  73;  Thompson  v.  Schermerhorn,  6  N.  Y.  92; 
Chase  V.  Scheerer,  136  Cal.  248,  68  Pac.  768;  Bluffton  v.  Miller,  33  Ind.  App. 
621,  70  N.  E.  989. 

3  People  ez  rel.  Healy  v.  Clean  Street  Co.,  225  111.  470,  80  N.  E.  298;  Jewell 
Belting  Co.  v.  Bertha,  91  Minn.  9,  97  N.  W.  424;  Phelps  v.  New  York,  112 
N.  Y.  216,  19  N.  E.  408;  Att'y.  Gen.  v.  Lowell,  67  N.  H.  198,  38  Ati.  270; 
Blair  v.  Waco,  75  Fed.  800;  Foster  ;;.  Cape  May,  60  N.  J.  L.  78,  36  Atl.  1089. 

*  Jewell  Belting  Co.  v.  Bertha,  supra;  Harcourt  v.  Asbury  Park,  62  N.  J.  L. 
158,  40  Atl.  690. 

6 


CHAP.  II  ]  WHERE    POWER   LODGED  [  §  5 

Powers  vested  in  a  particular  officer  can  only  be  exer- 
cised by  him  and  not  by  his  subordinates. 

§  5.  Limitations  on  Power. 

Whoever  deals  with  the  officers  of  a  pubUc  body  is 
bound  at  his  peril  to  take  notice  of  the  Umitations  upon 
their  power  and  authority,  for  they  can  only  bind  the 
public  body  which  they  represent  within  the  limits  of 
their  chartered  authority.^  These  officers  cannot  make  a 
contract  which  is  expressly  prohibited  by  charter  or 
statute  and  a  contract  beyond  the  scope  of  corporate 
power  is  void.-  Where  a  particular  manner  of  contracting 
is  prescribed,  the  manner  is  the  measure  of  power  and  must 
be  followed  to  create  a  valid  contract.^  And  no  implied 
contract  can  be  predicated  upon  acts  of  such  officers  in 
attempting  to  make  contracts  beyond  the  scope  of  corpo- 
rate power.  ^  Provisions  of  statutes  relating  to  the  power  to 
contract,  the  manner  of  its  exercise,  or  its  terms  may  not 
be  waived,  but  must  be  strictly  pursued.^ 

But  not  only  are  public  bodies  required  to  have  author- 
ity to  contract  but  they  are  generally  required  to  have 
funds  available  or  appropriated  to  carry  out  the  contract 

1  Osgood  V.  Boston,  165  Mass.  281,  43  N.  E.  108;  Bennett  v.  Mt.  Vernon,  124 
Iowa,  537,  100  N.  W.  349;  Jewel  Belting  Co.  v.  Bertha,  91  Minn.  9,  97  N.  W. 
424;  N.  J.  &  N.  E.  Tel.  Co.  v.  Fire  Comm'rs,  34  N.  J.  Eq.  117,  34  Id.  580; 
Taft  V.  Pittsford,  28  Vt.  286;  Re  Niland,  113  N.  Y.  App.  Div.  661,  193  N.  Y. 
180,  85  N.  E.  1012. 

2  McCoy  V.  Briant,  53  Cal.  247;  Weitz  v.  Des  Moines,  79  Iowa,  423,  44  N.  W. 
696;  Reeside  v.  U.  S.,  2  Ct.  CI.  1. 

'  Zottman  v.  San  Francisco,  20  Cal.  102;  McCoy  v.  Briant,  supra;  Fiske  v. 
Worcester,  219  Mass.  428,  106  N.  E.  1025;  Wellston  v.  Morgan,  65  Ohio  St. 
219,  62  N.  E.  127. 

4  Winchester  v.  Redmond,  93  Va.  711,  25  S.  E.  1001;  Black  v.  Detroit,  119 
Mich.  571,  78  N.  W.  660;  St.  Louis  v.  Davidson,  102  Mo.  149,  14  S.  W.  825; 
Farwell  v.  Seattle,  43  Wash.  141,  86  Pac.  217;  Re  Niland,  supra. 

5  Medina  v.  Dingledine,  211  N.  Y.  24,  104  N.  E.  1118;  Schliess  v.  Grand 
Rapids,  131  Mich.  52,  90  N.  W.  700;  Carpenter  v.  Yeadon  Borough,  208  Pa. 
396,  57  Atl.  837. 

7 


§  5  ]  THE   POWER   TO    CONTRACT  [  PART  I 

before  it  can  have  any  validity.^  Where  such  is  the  pro- 
\ision,  no  power  to  award  a  contract  exists  in  the  absence 
of  a  prior  appropriation.-  And  when  money  has  been 
appropriated,  no  recovery  is  permitted  beyond  the  amount 
appropriated  or  the  power  to  expend  Umited  by  law.^  A 
contract  to  incur  an  obhgation  in  excess  of  existing  ap- 
propriations for  the  purpose  is  illegal  and  void/  and  a  like 
result  follows  where  there  is  a  failure  to  comply  with 
constitutional  hmitations  on  the  power  to  create  debts. ^ 
If  pubHc  agents  are  authorized  to  contract  not  to  exceed  a 
sum  stated,  they  have  no  power  to  contract  for  a  larger 
sum  and  this  limitation  of  power  binds  all  deahng  with 
such  agents.^ 

The  mere  fact  that  funds  are  available  in  the  form  of 
an  unexpended  balance  in  the  public  treasury  arising  from 
a  le\y  for  the  same  purpose  in  the  previous  year  will  not 
suflfice  as  an  appropriation  to  support  an  obligation.^ 
But  if  an  appropriation  exists  and  is  subsequently  ex- 
hausted, the  suppUes  ordered  upon  such  existing  appropria- 
tion will  constitute  a  valid  contract.^  By  special  act  of 
Congress  it  has  been  provided  that  none  of  its  acts  shall  be 
construed  to  make  an  appropriation  or  to  authorize  the 
making  of  a  contract  involving  the  payment  of  money  in 
excess  of  the  appropriations  made  by  law,  unless  such  act 
shall   in   specific   terms  declare   that  an  appropriation  is 

1  Williams  v.  New  York,  118  App.  Div.  756,  192  N.  Y.  541,  84  N.  E.  1123; 
Bradley  v.  U.  S.,  98  U.  S.  104,  25  L.  Ed.  105,  aff'g  13  Ct.  CI.  166;  May  v. 
Gloucester,  174  Mass.  583,  55  N.  E.  465;  Johnston  v.  PhUa.,  113  Fed.  40. 

2  WiUiams  v.  New  York,  supra,  and  cases  note  1. 
^  May  V.  Gloucester,  supra. 

*  Hurley  t-.  Trenton,  66  N.  J.  L.  538,  49  Atl.  518,  67  N.  J.  L.  350,  51  Atl.  1109. 
'  McXeal  v.  Waco,  89  Tex.  83,  33  S.  W.  322;  Drhew  v.  Altoona,  121  Pa.  St. 
401,  15  Atl.  636. 

«  Tumey  v.  Bridgeport,  55  Conn.  412,  12  Atl.  520;  May  v.  Gloucester,  supra. 
'  Neumeyer  v.  Krakel,  110  Ky.  624,  62  S.  W.  518. 
8  Chicago  V.  Berger,  100  lU.  App.  158. 

8 


CHAP.  Il]  WHERE    POWER   LODGED  [  §  6 

made  or  that  a  contract  may  be  executed.^  This  negatives 
any  possibility  of  appropriations  by  construction  or  impH- 
cation.  Prohibition  has  also  been  levelled  against  pay- 
ments which  will  exceed  the  value  of  services  already 
rendered  or  of  articles  or  suppUes  delivered  in  part  per- 
formance of  a  contract.^  Payments  made  in  \'iolation  of 
this  statute  are  void,^  although  payments  to  a  contractor 
may  be  made  where  he  has  performed,  even  if  the  govern- 
ment has  received  no  benefit  therefrom.^  These  and  other 
statutory  provisions  which  form  a  part  of  the  contract 
may  not  be  waived  but  must  be  adhered  to  strictly  as 
they  are  generally  accepted  as  mandatory.^  Stipulations 
or  conditions  which  are  merely  contractual  may  be  waived.^ 
When  the  power  to  contract  relates  to  public  improve- 
ments, such  power  is  limited  by  the  terms  of  the  legislation 
under  which  it  proceeds  to  contract.  A  failure  to  comply 
with  these  in  material  matters  will  make  the  contract  void, 
especially  in  the  case  of  improvements  to  be  paid  for  by 
local  assessment,  where  a  strict  interpretation  of  this  rule 
is  enforced.^ 

§  6.  Exhaustion  of  Power. 
The  grant  of  unhmited  power  by  the  legislature  to  a 

1  Sec.  6763,  U.  S.  Compiled  Statutes. 

2  Sec.  6647,  U.  S.  Compiled  Statutes. 

3  Pierce  v.  U.  S.  (The  Floyd  Acceptances),  7  Wall.  666,  682,  19  L.  Ed.  169, 
afTg.  1  Ct.  CI.  270. 

'  McClure  v.  U.  S.,  19  Ct.  CI.  173. 

6  Roberts  v.  Fargo,  10  N.  D.  230,  86  N.  W.  726. 

« Creston  Water  Wks.  v.  Creston,  101  Iowa,  687,  70  N.  W.  739;  Kennedy  v. 
New  York,  99  N.  Y.  App.  Div.  588;  SchUess  v.  Grand  Rapids,  131  Mich.  52, 
90  N.  W.  700;  Norton  v.  Roslyn,  10  Wash.  44,  38  Pac.  878. 

'  Hendrickson  v.  New  York,  160  N.  Y.  144,  54  N.  E.  680;  McDonald  v. 
Mayor,  68  N.  Y.  23,  23  Am.  R.  144;  People,  ex  rel.  O'Reilly  v.  Common  Council, 
189  N.  Y.  66,  81  N.  E.  557;  Lancaster  t;.  MiUer,  58  Ohio  St.  558,  51  N.  E.  52; 
Noel  V.  San  Antonio,  11  Tex.  C.  A.  580,  33  S.  W.  263;  Chippewa  Bridge  Co.  v. 
Durand,  122  Wis.  85,  99  N.  W.  603. 

9 


§  6  ]  THE    POWER   TO    CONTRACT  [  PART  I 

public  body  is  not  exhausted  by  the  first  or  a  single  at> 
tempt  at  its  exercise.^  If  the  legislature  surrounds  the 
power  with  no  limits  or  bounds,  the  extent  of  the  use  of 
the  power  is  left  to  the  discretion  of  the  public  body, 
and  is  a  legislative  question,  not  a  judicial  one,  upon  which 
the  court  cannot  substitute  its  judgment  for  that  of  the 
governing  body  and  voters  of  the  community.^  Under 
such  grants  of  power,  new  water,  light  or  other  public 
service  plants  or  contracts  for  new  or  additional  supplies  of 
these  commodities  may  be  made  in  the  discretion  of  the 
pubUc  body  without  interference.'  Where  the  grant 
authorizes  a  supply  and  two  distinct  methods  by  which  the 
supply  may  be  obtained,  the  making  of  the  contract  in  the 
former  case  or  the  exercise  of  either  method  in  the  latter 
exhausts  the  power  conferred  by  the  grant  and  a  further 
attempt  to  exercise  the  power  will  be  enjoined.'*  In  these 
circumstances,  the  municipality  may  neither  erect  its  own 
plant  or  create  competition  by  making  another  contract 
for  a  supply,  under  that  particular  grant  of  power.  ^  On 
the  other  hand,  general  terms  in  a  statute  have  been 
declared  not  to  create  an  exclusive  franchise  to  furnish 
a  pubUc  utility,  so  as  to  preclude  the  public  body  from 
obtaining  it  from  other  sources.®  There  is  a  distinction, 
however,  between  grants  of  power  or  contracts  made 
which  exclude  all  competition  and  those  which  merely 
exclude  competition  by  the  public  body  until  it  shall  pur- 

1  Lucia  V.  Montpelier,  60  Vt.  537,  15  Atl.  321,  1  L.  R.  A.  169;  Janeway  v. 
Duluth,  65  Minn.  292,  68  N.  W.  24. 

2  Idem. 
'  Idem. 

<  White  V.  MeadviUe,  177  Pa.  St.  643,  35  Atl.  695;  Wilson  v.  Rochester,  180 
Pa.  St.  .509,  38  Atl.  136;  Troy  Water  Co.  v.  Troy,  200  Pa.  St.  453,  50  Atl.  259. 

5  Atlantic  City  Water  Works  v.  Atlantic  City,  39  N.  J.  Eq.  367.     Cases, 
note  4. 

6  Re  Brooklyn,  143  N.  Y.  596,  38  N.  E.  983,  26  L.  R.  A.  270. 

10 


CHAP.  II  ]  WHERE    POWER    LODGED  [  §  6 

chase  the  plant  of  the  existing  company  or  make  com- 
pensation to  it.^  And  when  there  is  no  agreement  that  the 
pubhc  body  will  not  compete,  or  purchase  the  plant, 
should  it  decide  to  compete,  there  is  no  barrier  to  such 
action,-  and  it  may  after  granting  a  franchise  which  is  not 
exclusive  contract  to  erect  its  own  plant, ^  where  it  has  not 
expressly  or  by  necessary  implication  agreed  otherwise. 
Such  outstanding  contract  with  a  company  still  willing  to 
carry  out  its  contract  does  not  operate  to  exhaust  the 
power  to  procure  water  and  light  or  other  public  service 
from  another  source.^  Even  the  exclusive  right  to  hght 
the  streets  of  a  municipality  with  gas  for  a  definite  period 
will  not  prevent  it  from  contracting  to  light  the  streets 
by  electricity.^  In  like  manner,  where  a  public  body  has 
charter  power  to  abate  nuisances  injurious  to  the  public 
health  and  safety  and  to  make  regulations  necessary  to  the 
preservation  of  health  and  the  suppression  of  disease,  it 
does  not  exhaust  its  power  with  respect  to  dust  raised  by 
the  operation  of  a  street  railway  where  it  requires  by  the 
franchise  contract  that  such  railway  shall  clean  and  repair 
so  much  of  the  street  as  is  between  the  rails,  but  it  may 
also  require  the  sprinkling  of  the  tracks  to  lay  the  dust.^ 
Where  a  clerk  in  publishing  a  required  notice  under  a 
public  improvement  contract  fails  in  his  first  effort  to 
properly    pubhsh   it,    this   will   not   deprive   him   or   the 

1  WaUa  WaUa  W.  Co.  v.  WaUa  WaUa  City,  60  Fed.  957,  aff'd  172  U.  S.  1, 
43  L.  Ed.  341. 

2  KnoxviUe  W.  Co.  v.  Knoxville,  200  U.  S.  22,  50  L.  Ed.  353;  Westerly 
Waterworks  Co.  v.  Westerly,  80  Fed.  611;  United  R.  R.  v.  San  Francisco,  249 
U.  S.  517,  63  L.  Ed.  739. 

3  North  Springs  Water  Co.  v.  Tacoma,  21  Wash.  517,  58  Pac.  773,  47  L.  R.  A. 
214. 

*  Nalle  V.  Austin,  85  Tex.  520,  22  S.  W.  668,  960. 

5  Saginaw  G.  L.  Co.  v.  Saginaw,  28  Fed .  529. 

6  St.  Paul  V.  St.  Paul  City  Ry.  Co.,  114  Minn.  250,  130  N.  W.  1108,  36 
L  R.  A.  N.  s.  235. 

11 


§  6  ]  THE  POWER  TO  CONTRACT         [  PART  I 

public  body  of  further  power  but  they  may  treat  the  first 

publication  as  of  no  validity  and  proceed  with  the  second 

pubUcation.i    Where  a  committee  has  been  authorized  by 

the  general  governing  body  to  make  a  contract  and  made  it, 

it  exhausted  its  power  and  had  no  authority  to  enter  into  a 

second  contract.^ 

1  Gilmore  v.  Utica,  131  N.  Y.  26,  29  N.  E.  841.       ^^  ^^  ^  ^^^ 
8  Boston  Elec.  L.  Co.  v.  Cambridge,  163  Mass.  64,  39  N.  E.  787. 


12 


CHAPTER  III 

CONTROL  OF  EXERCISE  OF  POWERS  BY  JUDICIAL  AND   LEGIS- 
LATIVE BRANCHES  OF  GOVERNMENT 

§  7.  Judicial  Control. 

The  State  has  the  right  to  make  contracts,  incur  obli- 
gations or  expend  money  even  though  the  work  or  purpose 
may  be  improvident  and  prove  to  be  useless  to  the  pubHc. 
The  legislature  as  the  depositary  of  the  sovereign  powers 
of  the  people  is  the  judge  of  the  propriety  and  utility  of 
making  the  contracts,  incurring  the  obligations  or  expend- 
ing the  money,  and  the  courts  cannot  institute  an  inquiry 
concerning  the  motives  and  purposes  of  the  legislature 
in  order  to  attribute  to  it  a  design  contrary  to  that  clearly 
expressed  or  fairly  imphed  in  the  bill,  without  disturbing 
and  impairing  the  functions  assigned  by  the  constitution  to 
each  department  of  government.  The  courts  may  not  by 
independent  inquiry,  upon  the  testimony  of  witnesses, 
determine  that  the  purpose  of  the  legislature  was  to 
appropriate  public  money  and  make  a  contract  expending 
it  in  improvements  for  the  benefit  of  an  individual  and  in 
this  manner  overthrow  the  legislative  act  and  deny  valid- 
ity to  such  a  contract.^ 

Accordingly  legislation  under  which  public  contracts  may 
be  made  cannot  be  impeached  or  attacked  or  investigated 
when  before  the  court,  because  the  motives  of  the  legis- 
lators were  improper  or  against  the  general  policy  of  the 

1  Waterloo  W.  Mfg.  Co.  v.  Shanahan,  128  N.  Y.  345,  28  N.  E.  358;  Devoy  v. 
Craig,  231  N.  Y.  186,  131  N,  E.  884;  Daggett  v.  Colgan,  92  Cal.  53,  28  Pac.  51; 
McCulloch  V.  State,  11  Ind.  424;  State  v.  Hays,  49  Mo.  604. 

13 


§  7  ]  THE    POWER   TO    CONTRACT  [  PART  I 

State.  ^  Nor  may  they  be  attacked  even  when  fraud  or 
corruption  procured  the  legislation.^ 

In  the  case  of  political  subdivisions  of  the  State  it 
is  settled  by  an  overwhelming  weight  of  authority  that 
within  the  sphere  of  their  powers  they  are  not  subject  to 
judicial  control  and  supervision  except  in  cases  of  fraud, ^ 
or  gross  abuse  of  power  or  discretion.^  The  courts  may 
construe  their  powers,  but  the  public  bodies  themselves 
are  vested  with  the  sole  power  of  determining  when  they 
shall  be  exercised.^  This  exercise  being  a  matter  of  dis- 
cretion is  not  subject  to  judicial  control  which  would  simply 
result  in  the  substitution  of  the  court's  judgment  for  that 
of  the  officers  to  whom  it  was  specifically  intrusted  by  law.^ 

The  motives  which  induce  the  legislative  action  of  a 
governing  body  of  a  municipality  or  the  influences  which 
controlled  it  in  enacting  ordinances  may  not  be  inquired 
into  by  the  judicial  branch  of  government.^  Whether  the 
act  is  within  powers  granted  is  for  the  courts  to  decide; 
whether  it  is  a  wise  exercise  of  power  is  for  the  public 
body  to  determine.^ 

1  People  V.  Shepard,  36  N.  Y.  285;  Chase  Hibbard  M.  Co.  v.  Elmira,  207 
N.  Y.  460,  467. 

2  U.  S.  V.  Old  Settlers,  148  U.  S.  427,  37  L.  Ed.  509;  New  Orleans  v.  Warner, 
175  U.  S.  120,  44  L.  Ed.  96;  Fletchers.  Peck,  6  Cranch  (U.  S.),  87,  3  L.  Ed.  162. 

3  Fawcett  v.  Mt.  Airy,  134  N.  C.  125,  45  S.  E.  1029. 

^  Crawfordsville  v.  Braden,  130  Ind.  149,  28  N.  E.  849;  Valparaiso  v.  Gard- 
ner, 97  Ind.  1,  49  Am.  R.  416. 

^  Fawcett  v.  Mt.  Airy,  supra. 

« Gale  ;;.  Kalamazoo,  23  Mich.  344,  9  Am.  R.  80;  In  re  Borough  of  Millvale, 
162  Pa.  St.  374,  29  Atl.  641;  Des  Moines  G.  Co.  v.  Des  Moines,  44  Iowa,  505, 
24  Am.  R.  756. 

^Soon  Hing  v.  Crowley,  113  U.  S.  703,  710,  28  L.  Ed.  1145;  Gardner  v. 
BlufTton,  173  Ind.  454,  89  N.  E.  853;  People  v.  Gardner,  143  Mich.  104,  106 
N.  W.  541;  Moore  v.  Haddonfield,  62  N.  J.  L.  386,  41  Atl.  946;  Kittinger  v. 
Buffalo  T.  Co.,  160  N.  Y.  377,  54  N.  E.  1081;  Wood  v.  Seattle,  23  Wash.  1, 
62  Pac.  135;  New  Orleans  v.  Warner,  175  U.  S.  120,  44  L.  Ed.  96;  LiUy  v. 
Indianapolis,  149  Ind.  648,  49  N.  E.  887;  Paine  v.  Boston,  124  Mass.  486. 

8  Douglas  V.  City  Council  of  Greenville,  92  S.  C.  374,  75  S.  E.  687;  Devoy  v. 
Craig,  231  N.  Y.  186,  131  N.  E.  884. 

14 


CHAP.  Ill  ]      JUDICIAL   AND    LEGISLATIVE    POWERS  [  §  7 

But  while  these  governing  bodies  of  municipaUties  are 
clothed  with  the  sovereignty  of  the  State  to  legislate  precisely 
the  same  as  the  legislature  might  do,  there  are  many  duties 
devolved  upon  them  which  are  not  legislative  in  character, 
but  are  administrative,  and  in  some  instances  quasi-judicial 
in  nature  and  not  at  all  impressed  with  the  character  of  sover- 
eignty. When  they  are  acting  in  an  administrative  capacity, 
the  courts  may  supervise  their  conduct  and  inquire  into  the 
motives  which  induced  the  members  to  vote  and  if  their 
action  was  the  result  of  corruption,  fraud  or  bad  faith 
amounting  to  fraud,  it  may  be  set  aside.  ^  Such  action  and 
a  contract  entered  into  thereby  will  in  any  event  be  de- 
termined void  and  against  pubhc  policy, ^  or  illegal  and  void.^ 

If  an  act  of  Congress  is  in  question,  its  acts  or  the 
conduct  or  motives  of  its  members  cannot  be  made  the 
subject  of  judicial  investigation.  Under  no  circumstances, 
may  the  judicial  invade  the  legislative  department  for  the 
correction  of  discretionary  acts.^  The  same  rule  applies 
to  the  executive  department.  The  courts  may  not  invade 
it  to  correct  alleged  mistakes  or  wrongs  arising  from 
asserted  abuse  of  discretion.^ 

A  determination  of  municipal  authorities  that  a  new 
street  should  be  laid  out  across  a  steam  surface  railroad 
is  not  an  act  of  political  sovereignty  merely  but  an  exer- 
cise of  a  judicial  function  which  may  be  reviewed  in  the 
courts,  where  the  authority  to  determine  as  to  the  neces- 
sity of  the  crossing  is  qualified.^ 

1  Weston  V.  Syracuse,  158  N.  Y.  274,  53  N.  E.  12;  State  v.  Gates,  190  Mo. 
540,  89  S.  W.  881. 

2  Weston  V.  Syracuse,  supra;  Honaker  v.  Bd.  of  Educ,  42  W.  Va.  170,  24 
S.  E  511. 

3  McMUlan  v.  Barber  Asph.  P.  Co.,  151  Wis.  48,  138  N.  W.  94. 
*  U.  S.  V.  Old  Settlers,  148  U.  S.  427,  466,  37  L.  Ed.  509. 

6  Dakota  Cent.  Tel.  Co.  v.  South  Dakota,  250  U.  S.  163,  184. 
« Matter  of  Delavan  Ave.,  167  N.  Y.  256,  60  N.  E.  589. 

15 


§  7  ]  THE  POWER  TO  CONTRACT         [  PART  I 

Thus  the  determination  by  a  mayor  or  engineer  under 
whose  direction  a  contract  is  being  carried  out  that 
it  is  not  proceeding  properly  may  be  reviewed  by  the 
courts  since  it  is  the  exercise  of  a  judicial  function,  and, 
therefore,  must  be  based  upon  facts  to  justify  it.  When 
it  is  exercised  capriciously  or  arbitrarily  the  courts  will 
afford  a  contractor  reUef  against  it.^  In  Uke  manner 
the  determination  as  to  who  is  lowest  bidder  is  judicial 
and  may  not  be  capriciously  or  arbitrarily  determined. ^ 
The  question  whether  a  reserved  power  to  suspend  the 
work  is  properly  exercised  under  the  terms  of  the  con- 
tract may  be  judicially  reviewed.^ 

§  8.  Legislative  Control. 

The  powers  which  have  been  delegated  to  municipalities 
by  charter  or  statute  are  always  subject  to  amendment 
or  alteration  by  the  legislature,  unless  restrained  by 
constitutional  provision .  ^ 

The  political  or  governmental  powers  of  municipahties 
are  not  vested  rights  and  the  legislature  may  alter,  amend, 
change  or  revoke  them  at  pleasure.  They  are  mere  agents 
of  the  State  who  stand  in  no  contract  relation  to  their 
sovereign.  Even  charters  granted  under  the  sovereignty 
of  England  are  subject  in  the  same  manner  to  amend- 
ment, change  or  revocation.  It  is  only  with  respect  to 
their  private  or  proprietary  rights  and  interests  that  they 
may  be  entitled  to  protection  under  the  contract  clause 

I  Chicago  V.  Sexton,  115  lU.  230,  2  N.  E.  263;  Wakefield  Cons.  Co.  v.  New 
York,  157  N.  Y.  App.  Div.  535,  213  N.  Y.  633. 

^Erving  v.  Mayor,  131  N.  Y.  133;  People  ex  rel.  Coughlin  v.  Gleason,  121 
N.  Y.  631,  25  N.  E.  4;  MoUoy  v.  New  RocheUe,  198  N.  Y.  402,  92  N.  E.  94. 

» Johnston  v.  New  York,  191  N.  Y.  App.  Div.  205. 

*  Demarest  v.  Mayor,  74  N.  Y.  161;  New  Orleans  v.  New  Orleans  W.  Co., 
142  U.  S.  79,  35  L.  Ed.  943;  Hunter  v.  Pittsburgh,  207  U.  S.  161,  52  L.  Ed.  151, 
aff'g  217  Pa.  St.  227,  66  Atl.  348. 

16 


CHAP.  Ill  ]      JUDICIAL   AND    LEGISLATIVE    POWERS  [  §  8 

of  the  Federal  Constitution.  ^  While  municipalities  are 
created  by  the  legislature  as  instrumentalities  of  govern- 
ment, and  so  far  as  legislation  for  governmental  purposes 
is  concerned  are  thus  subject  to  control,  yet  where  the 
purpose  is  a  private  one,  they  cannot  be  compelled  to 
enter  into  contracts,  ^  and  this  obtains  although  the  con- 
tract is  public  in  some  respects.  They  cannot,  therefore, 
be  compelled  to  take  stock  in  a  private  corporation  against 
their  will  and  without  their  consent.^  Property  of  which 
a  public  body  has  acquired  absolute  ownership  as  an 
agency  of  the  State  is  subject  to  legislative  control,  but 
not  the  property  which  it  holds  as  proprietor  in  its  private 
capacity.^ 

Municipalities  possess  all  the  powers  of  corporations 
generally  and,  therefore,  may  not  be  deprived  of  their 
property  by  legislative  action  without  their  consent  or  due 
process  of  law  any  more  than  a  private  corporation  can, 
and  since  their  revenues  must  be  used  for  municipal  pur- 
poses, the  legislature  cannot  make  contracts  for  them 
which  involve  the  expenditure  of  these  revenues  wdthout 
their  consent.^ 

1  New  Orleans  v.  New  Orleans  W.  Co.,  supra;  Demarest  v.  Mayor,  supra. 

2  People  ex  rel.  Dunkirk  W.  &  P.  R.  Co.  v.  Batchellor,  53  N.  Y.  128,  13  Am. 
R.  480. 

3  People  ex  rel.  Dunkirk  W.  &  P.  R.  Co.  v.  Batchellor,  supra. 
*  Higginson  v.  Boston,  212  Mass.  583,  99  N.  E.  523. 

6  People  ex  rel.  Rodgers  v.  Coler,  166  N.  Y.  1,  59  N.  E.  716. 


17 


CHAPTER  IV 

SURRENDER  OR   BARTER   OF  DISCRETIONARY   POWERS — 
BINDING    SUCCESSORS 

§  9.  Surrender  and  Barter  of  Legislative  and  Govern- 
mental Power. 

The  States  and  their  agents,  the  municipalities  acting 
through  their  legislative  or  general  governing  bodies, 
may  not  agree  that  they  will  refrain  from  the  exercise  of 
their  governmental  powers.  They  have  no  power  to  enter 
into  contracts  which  diminish  or  prohibit  the  exercise  of 
legislative  authority,  whenever  the  public  interests  demand 
that  they  should  act.  They  may  not  bind  themselves 
to  subserve  private  interests.  The  functions  of  legislative 
and  governmental  power  must  be  preserved  for  the  public 
good  and  not  curtailed  or  embarrassed.^  The  judgment 
of  public  officials  in  these  matters  must  be  without  re- 
straint or  control  so  that  it  may  be  exercised  impartially 
and  at  all  times.'  They  may  not  render  themselves,  as 
occasion  for  its  exercise  shall  occur  from  time  to  time, 
unable  to  control  any  matter  which  may  arise  in  the 
future  concerning  which  they  shall  have  a  legislative 
duty.3 

Municipalities,    therefore,    cannot   divest   themselves   of 

1  Darling  v.  Newport  News,  249  U.  S.  540,  63  L.  Ed.  759;  Martin  v.  Brooklyn, 
1  Hill,  546;  People  ex  rel.  Healy  v.  Clean  Street  Co.,  225  111.  470,  80  N.  E.  298. 

2  Edwards  v.  Goldsboro,  141  N.  C.  60,  53  S.  E.  652. 

'  Davis  V.  N.  Y.,  14  N.  Y.  506;  Snyder  v.  Mt.  Pulaski,  176  111.  397,  52  N.  E. 
62;  Gale  v.  Kalamazoo,  23  Mich.  344;  Wash.  R.  Co.  v.  Defiance,  167  U.  S. 
88,  42  L.  Ed.  87,  aff'g  52  Ohio  St.  262,  40  N.  E.  89;  State  ex  rel.  Townsend  «;. 
Bd.  of  Park  Commrs.,  100  Minn.  150,  110  N.  W.  1121. 

18 


CHAP.  IV  ]     ,  DISCRETIONARY   POWERS  [  §  9 

the  legislative  discretion  conferred  upon  them  by  law. 
They  can  neither  surrender  it  by  contract,  nor  bind  them- 
selves not  to  exercise  it  whenever  it  may  become  neces- 
sary.^ They  may  not  delegate  its  exercise  to  private 
indiv'iduals  or  even  to  administrative  officials. ^  They 
cannot  surrender  or  contract  away  any  of  the  great 
governmental  powers  such  as  the  poUce  power,  the  power 
of  taxation  or  the  power  of  eminent  domain.  These 
powers  cannot  be  bartered  away.^  They  are  inalienable 
even  by  express  grant.''  But  a  State  or  its  local  govern- 
ment when  so  empowered  may  make  a  binding  contract 
divesting  itself  for  a  substantial  period  of  time  of  the 
power  to  regulate  rates.  ^  The  time  must  be  only  for  a 
reasonable  time.^  It  cannot  divest  itself  by  a  perpetual 
contract.^ 

Merely  because  a  statute  requires  the  consent  of  a  city 
before  tracks  can  be  laid  will  not  authorize  a  city  to 
contract  away  the  police  power  or  power  of  taxation  of 
the  State  on  consenting  to  the  construction  of  tracks  in 
the  public  street.^  Not  even  the  State  itself  could  do 
this,  for  these  great  powers  of  government  must  be  re- 

1  Brick  Pres.  Church  v.  New  York,  5  Cowen,  540;  Johnson  v.  Phila.,  60  Pa. 
St.  445. 

2  New  Orleans  v.  Sanford,  137  La.  628,  69  So.  35;  Thompson  v.  Schermerhorn, 
6  N.  Y.  92;  Zable  v.  Louisville  Bapt.  Orphan  Home,  92  Ky.  89,  17  S.  W.  212. 

3  Northern  Pac.  Ry.  Co.  v.  Duluth,  208  U.  S.  583,  52  L.  Ed.  630,  aff'g  98 
Minn.  429,  108  N.  W.  269;  Stone  v.  Mississippi,  101  U.  S.  814,  25  L.  Ed.  1079. 

*  Denver  &  R.  G.  R.  R.  Co.  v.  Denver,  250  U.  S.  241,  63  L.  Ed.  958. 

5  Home  Tel.  Co.  v.  Los  Angeles,  211  U.  S.  273,  53  L.  Ed.  176,  aflf'g  155  Fed. 
554;  Minneapolis  v.  St.  Ry.  Co.,  215  U.  S.  417,  54  L.  Ed.  259. 

8  Home  Tel.  Co.  v.  Los  Angeles,  supra;  Danville  v.  Danville  W.  Co.,  178 
111.  299,  53  N.  E.  118;  Columbus  G.  L.,etc.,  Co.  v.  Columbus,  50  Ohio  St.  65, 
33  N.  E.  292;  McBean  v.  Fresno,  112  Cal.  159,  44  Pac.  358,  31  L.  R.  A. 
794. 

'  Westminster  W.  Co.  v.  Westminster,  98  Md.  551,  56  Atl.  990;  MobUe 
Elec.  Co.  V.  Mobile,  201  Ala.  607,  79  So.  39,  L.  R.  A.  1918  F.  667. 

8  Rochester  Ry.  Co.  v.  Rochester,  205  U.  S.  236,  51  L.  Ed.  784,  aflf'g  182 
N.  Y.  99,  74  N.  E.  953,  70  L.  R.  A.  773. 

19 


§  9  ]  THE  POWER  TO  CONTRACT        [  PART  I 

tained  undiminished  to  be  exercised  whenever  the  welfare 
of  the  State  requires.^ 

In  like  manner,  a  provision  in  a  charter  by  which  the 
State  barters  away  any  of  the  powers  of  sovereignty,  as,  for 
instance,  the  power  of  eminent  domain,  is  void  and  when 
the  bargain  is  attacked,  the  constitutional  protection  of 
the  obligations  of  contract  will  not  apply.^  Under  these 
principles  municipalities  may  through  legislative  act  when 
properly  and  clearly  thereunto  authorized  make  inviolable 
contracts  fixing  the  rates  which  those  exercising  public 
service  functions  or  franchises  shall  charge  during  a  defi- 
nite term  provided  it  be  not  unreasonable  in  duration, 
and  it  does  not  matter  that  the  effect  of  such  a  con- 
tract is  to  suspend,  during  the  fife  of  such  contract,  the 
governmental  power  to  regulate  rates. ^  But  where,  on  the 
other  hand,  an  ordinance  is  passed  by  a  city  council  and 
accepted  by  a  pubhc  service  company  as  part  of  its 
franchise  by  which  it  is  required  to  sell  half  fare  tickets  to 
certain  classes  of  passengers,  this  does  not  constitute  an 
in\'iolable  contract  protected  from  change  or  annulment 
by  the  legislature  under  the  contract  clause  of  the  Federal 
Constitution,  but  is  a  mere  governmental  rule  or  regulation 
which  is  subject  to  revocation  by  the  legislature  of  the 
State/ 

Since  the  provisions  of  municipal  charters  are  subject 
to  the  legislative  authority  of  the  State,  contractual  pro- 

1  State  ex  rel.  Townsend  v.  Bd.  of  Pk.  Commrs.,  100  Minn.  150,  110  N.  W. 
1121. 

2  Hyde  Park  v.  Oakwoods  Cemetery  Assn.,  119  III.  141,  7  N.  E.  627. 

3  Home  Tel.  Co.  v.  Los  Angeles,  211  U.  S.  265,  53  L.  Ed.  176,  aff'g  155  Fed. 
554;  Englewood  v.  Denver  &  S.  R.  Co.,  248  U.  S.  294,  63  L.  Ed.  253;  Wor- 
cester V.  Worcester  St.  Ry.  Co.,  196  U.  S.  539,  49  L.  Ed.  591,  aff'g  182  Mass. 
49,  64  N.  E.  581;  New  Orleans  v.  New  Orleans  W.  Co.,  142  U.  S.  79,  35  L.  Ed. 
943;  Minneapolia  R.  Co.  v.  Street  Ry.  Co.,  215  U.  S.  417,  54  L.  Ed.  259. 

*  Pawhuska  v.  Pawhuska  O.  &  G.  Co.,  250  U.  S.  394,  63  L.  Ed.  1054; 
Dubuque  Elec.  Co.  v.  Dubuque,  260  Fed.  353. 

20 


CHAP.  IV  ]  DISCEETIONAEY   POWERS  [  §  9 

visions  in  franchises  conferred  by  municipal  corporations 
upon  public  service  companies  are  subject  to  be  set  aside 
by  the  exercise  of  the  sovereign  power  of  the  State,  ^ 
unless  the  legislature  has  expressly  provided  that  municipal 
corporations  may  make  a  binding  agreement  with  such 
companies  respecting  the  rates  or  fares.  ^  The  provisions 
of  the  State  constitution  that  consent  to  construct  street 
railroads  must  be  obtained  from  the  local  authorities  is 
not  a  surrender  by  the  State  of  the  right  to  govern  or 
regulate  fares  under  its  police  power.  These  provisions 
do  not  affect  the  inherent  power  of  the  State  to  regulate 
the  fares  to  be  charged  by  a  public  service  corporation.^ 
In  the  acquiring  of  land  to  be  used  in  widening  or  opening 
a  street  it  may  not  agree,  in  consideration  of  a  conveyance 
of  such  land,  to  maintain  the  street  as  widened/  or  per- 
petually as  a  particular  class  of  highway,^  as  such  action 
divests  it  of  legislative  powers.  Nor  may  it  contract  away 
its  continuing  duty  to  keep  highways  safe  and  under  its 
control.^  Under  such  attempted  exercise  of  power,  no 
enforceable  right  can  arise  to  maintain  a  private  drain 
in  a  highway,^  nor  a  private  railroad  spur,^  nor  for  the 

lEwing  V.  Seattle,  55  Wash.  229;  Puget  Sound  Traction  Co.  v.  Reynolds, 
244  U.  S.  574,  61  L.  Ed.  1325,  aff'g  223  Fed.  371. 

2  Detroit  United  RaUway  v.  Michigan,  242  U.  S.  238,  248,  61  L.  Ed.  268; 
Matter  of  Quimby  v.  PubUc  Service  Comm.,  223  N.  Y.  244,  119  N.  E.  433; 
People  ex  rel.  Village  of  So.  Glens  Falls  v.  Public  Service  Comm.,  225  N.  Y. 
216,  121  N.  E.  777;  Matter  of  Inter.  Ry.  v.  Pub.  Serv.  Comm.,  226  N.  Y.  474, 
124  N.  E.  123;  Matter  of  Niagara  Falls  v.  Pub.  Serv.  Comm.,  229  N.  Y.  333, 
128  N.  E.  247;  Matter  of  McAneny,  198  N.  Y.  App.  Div.  205;  aff'd  232  N.  Y. 
377;  People  ex  rel.  New  York  v.  Nixon,  229  N.  Y.  356,  128  N.  E.  245. 

'  Matter  of  McAneny,  supra. 

4  Penley  v.  Auburn,  85  Me.  278,  27  Atl.  158. 

6  State  ex  rel.  Townsend  v.  Bd.  of  Pk,  Commrs.,  100  Minn.  150,  110  N.  W. 
1121. 

8  Ft.  Smith  V.  Hunt,  72  Ark.  556,  82  S.  W.  163;  Chicago,  B.  &  R.  Co.  v. 
Quincy,  136  111.  563,  27  N.  E.  192;  VandaUa  R.  Co.  v.  State,  166  Ind.  219,  76 
N.  E.  980. 

'  Eddy  V.  Granger,  19  R.  I.  105,  31  Atl.  831. 

8  Hatfield  v.  Straus,  189  N.  Y.  208,  82  N.  E.  172. 

21 


§  9  ]  THE   POWER  TO   CONTRACT  [  PART  I 

continuance  of  any  private  purpose  or  enterprise.^  And 
it  may  not  deprive  itself  of  the  right  to  compel  the  owners 
of  a  street  railway  to  keep  that  part  of  the  streets  occupied 
by  it  clean.-  It  may  not  agree  to  maintain  a  bridge  or 
other  structure  perpetually.^ 

§  10.  Surrender  of  Legislative  Power — Binding  Successors. 

A  municipality  has  two  classes  of  powers — the  one 
legislative,  public,  governmental,  in  the  exercise  of  which 
it  is  a  sovereign  and  governs  its  people; — the  other  pro- 
prietary, or  business  powers,  quasi-private  in  their  nature, 
conferred  upon  it  not  for  the  purpose  of  governing  its 
people,  but  for  the  private  advantage  of  such  public  body 
itself  as  a  legal  personahty.  In  the  exercise  of  the  former 
class  of  powers  officers  of  the  municipaUty  can  make  no 
grant  and  conclude  no  contract  which  will  bind  it  beyond 
the  terms  of  their  offices.  They  cannot  circumscribe  the 
legislative  powers  of  their  successors  and  deprive  them  of  the 
right  to  their  unrestricted  exercise,  as  the  exigencies  of  the 
times  may  demand.  They  are  bound  to  transmit  their  powers 
of  government  to  each  successive  set  of  officers  unimpaired.^ 

But  in  the  exercise  of  their  proprietary  powers,  they 
are  controlled  by  no  such  rule,  because  they  are  acting  and 
contracting  for  the  private  benefit  of  the  municipality  and 
its  inhabitants,  and  they  may  exercise  the  business  powers 
conferred  upon  it  in  the  same  way  and  subject  to  the  same 
rules  as  govern  a  natural  person.^  They  may,  therefore, 
just  as  natural  persons,  unless  they  have  been  limited  by 

1  People  ex  rel.  Healy  v.  Clean  Street  Co.,  225  III.  470,  80  N.  E.  298;  State 
ex  rel.  Belt  v.  St.  Louis,  161  Mo.  371,  61  S.  W.  658. 

2  Chicago  V.  Chicago  U.  T.  Co.,  199  III.  259,  65  N.  E.  243. 

3  State  ex  rel.  St.  Paul  v.  Minnesota  Transfer  Co.,  80  Minn.  108,  83  N.  W.  32. 

*  111.  Trust  &  Sav.  Bk.  v.  Arkansas  City,  76  Fed.  271;  Omaha  Water  Co.  v. 
Omaha,  147  Fed.  1;  Gale  v.  Kalamazoo,  23  Mich.  344;  Tempe  v.  Corbell,  17 
Ariz.  1,  147  Pac.  745. 

*  Idem. 

22 


CHAP.  IV  ]  DISCRETIONARY  POWERS  [  §  10 

statute,  make  contracts  of  long  duration  relating  to  the 
proprietary  or  business  side  of  their  existence,  and  these 
contracts  when  executed  will  bind  their  successors.^ 
The  only  limitation  which  the  law  imposes,  however,  in  the 
case  of  these  public  bodies  is  that  the  term  or  duration 
of  the  contract  shall  not  be  unreasonable.  These  powers  of 
a  business  nature  include  the  power  to  contract  for  goods 
and  supplies,  for  public  printing,  for  buildings,  for  water, 
gas,  electricity,  subways  and  similar  needs  of  the  commu- 
nity. ^  Contracts  whose  duration  has  extended  variously 
up  to  thirty  years  affecting  the  supply  of  water  and  light, 
have  been  sustained  as  reasonable,^  although  in  some  few 
jurisdictions  when  the  duration  reaches  or  approaches  a 
term  of  thirty  years,  it  has  been  held  unreasonable.'' 
PubHc  officials  may  not  bind  their  successors  in  office  to 
a  surrender  of  legislative  discretion,^  as  by  a  perpetual,^  or 
unreasonable  contract.^  An  exception  has  also  been  made 
in  the  case  of  personal  or  professional  service  contracts  to 
the  effect  that  such  do  not  bind  succeeding  officials  into 
whose  term  of  office  they  extend.^ 

1  T(iflffi 

2  Idem.;  Matter  of  Board  of  Rapid  Transit  Commrs.,  197  N.  Y.  81,  90  N.  E. 
456,  91  N.  E.  1110,  36  L.  R.  A.  n.  s.  647;  Valparaiso  v.  Gardner,  97  Ind.  1, 
49  Am.  R.  416;  Pickett  Pub.  Co.  v.  Carbon  County,  36  Mont.  188,  92  Pac.  524. 

3  Hartford  v.  Hartford  L.  Co.,  65  Conn.  324,  32  Atl.  925 ;  Vincennes  v.  Cits.  G. 
L.  Co.,  132  Ind.  114,  31  N.  E.  573,  16  L.  R.  A.  485;  Monroe  W.  Co.  v.  Heath, 
115  Mich.  277,  73  N.  W.  234;  Walla  WaUa  v.  Walla  WaUa  W.  Co.,  172  U.  S.  1, 
43  L.  Ed.  341,  aff'g  60  Fed.  957. 

*  Long  V.  Duluth,  49  Minn.  280,  51  N.  W.  915;  Brenham  v.  Brenham  W.  Co., 
67  Tex.  542,  4  S.  W.  143. 

sWaterbury  v.  Laredo,  68  Tex.  565,  5  S.  W.  81;  Westminster  W.  Co.  v. 
Westminster,  98  Md.  551,  56  Atl.  990. 

8  Westminster  W.  Co.  v.  Westminster,  98  Md.  551,  56  Atl.  990;  State  ex  rel. 
St.  Paul  V.  Minnesota  Trans.  Co.,  80  Minn.  180,  83  N.  W.  32;  Danville  W.  Co. 
V.  Danville,  178  111.  299,  53  N.  E.  118. 

7  Columbus  W.  Co.  v.  Columbus,  48  Kan.  99,  28  Pac.  1097. 

sEmmett  v.  DeLong,  12  Kan.  67;  Wihnington  v.  Bryan,  141  N.  C.  66,  54 
S.  E.  543;  Mack  v.  New  York,  37  Misc.  371,  82  N.  Y.  App.  Div.  637;  Jacobs 
V.  Elmira,  147  N.  Y.  App.  Div.  433. 

23 


§  10  ]  THE  POWER  TO  CONTRACT         [  PART  I 

"WTien  one  municipality  is  about  to  be  merged  into  a 
larger  city,  it  is  deprived  of  power  to  bind  itself  beyond  the 
term  of  its  own  existence  and  so  cannot  bind  its  successors. 
Accordingly,  a  contract  for  a  term  of  ten  years  entered 
into  by  a  town  fourteen  days  before  the  town  was  merged 
into  the  greater  city  by  virtue  of  the  Greater  New  York 
Charter  was  declared  to  be  a  scheme  to  incumber  and 
burden  the  new  city  and  would  not  be  permitted  to  have 
effect.^  A  pubhc  body  has  power,  even  though  the  terms 
of  office  of  its  members  is  about  to  expire,  and  their 
successors  have  been  elected,  to  contract  for  county 
printing  for  a  term  which  will  extend  almost  throughout 
the  entire  time  the  succeeding  board  will  be  in  office.^ 
The  erection  of  a  bridge  and  agreement  to  maintain  it 
perpetually  will  not  bind.^ 

In  some  States,  the  legislature  has  provided  a  limit 
of  duration  during  which  public  contracts  may  continue  in 
force  and  effect.  Contracts  made  for  a  term  longer  than 
permitted  by  statute  are  wholly  void,^  but  such  contracts 
have  been  declared  bad  only  for  the  excess  period,^ 
which  is  a  more  reasonable  and  logical  result.  A  lease 
of  property  by  the  national  government  through  its 
officials  is  only  binding  for  the  fiscal  year.^  In  like 
manner,  where  a  public  body  was  limited  in  its  power  to 
contract  for  water  supply  to  one  year  and  it  entered  into 
a  contract  for  twenty  years  the  contract  was  held  good  so 

1  Hendrickson  v.  New  York,  160  N.  Y.  144,  54  N.  E.  680. 

»  Picket  Pub.  Co.  v.  Carbon  County,  36  Mont.  188,  92  Pac.  524. 

'  State  ex  rel.  v.  Minn.  Trans.  Co.,  80  Minn.  108,  83  N.  W.  32. 

*  Gas  L.  Coke  Co.  v.  New  Albany,  156  Ind.  406,  59  N.  E.  176;  Somerset  v. 
Smith,  105  Ky.  678,  49  S.  W.  456. 

«  State  V.  Ironton  G.  Co.,  37  Ohio  St.  45;  Neosho  &c.  W.  Co.  v.  Neosho,  136 
Mo.  498,  38  S.  W.  89;  Defiance  W.  Co.  v.  Defiance,  90  Fed.  753;  Mobile  Elec. 
Co.  V.  Mobile,  201  Ala.  607,  79  So.  39,  L.  R.  A.  1918  F.  667. 

«  Hooe  V.  U,  S.,  218  U.  S.  322,  54  L.  Ed.  1055,  aff'g  43  Ct.  CI.  245;  Chase  v. 
U.  S.,  155  U.  S.  489,  39  L.  Ed.  234,  aff'g  44  Fed.  732. 

24 


CHAP.  IV  ]  DISCRETIONARY   POWERS         *  [  §  10 

far  as  executed,  in  other  words,  that  the  pubhc  body- 
should  pay  for  the  benefits  it  received  under  the  contract, 
and  that  an  action  would  lie  for  water  used  in  any  one 
year.^ 

1  Montgomery  v.  Montgomery  Works  Co.,  79  Ala.  233. 


25 


CHAPTER  V 

POWERS   OF   OFFICERS 

§  11.  Powers  of  Public  Officers  to  make  Contracts. 

All  persons  who  deal  with  municipalities  and  subor- 
dinate boards  and  agencies  of  the  State  and  national 
governments,  must  at  their  peril  inquire  into  the  power 
of  the  officers  or  agents  of  such  municipalities,  boards  or 
agencies  to  make  the  contract  contemplated,  for  acts  of 
such  officers  can  only  bind  in  the  manner  and  to  the  extent 
authorized.^  Those  dealing  with  these  officials  are  charge- 
able with  knowledge  of  the  limitations  upon  their  power 
to  contract,  and  where  they  transgress  the  powers,  their 
acts  are  void  and  will  bind  no  one.^  In  like  manner,  even 
though  a  contract  is  not  ultra  vires  but  is  entirely  within 
the  scope  of  its  corporate  powers,  public  bodies  are  not 
bound  by  such  a  contract  executed  in  its  name,  if  the 
officer  who  executes  it  had  no  power  or  authority  to 
enter  into  the  contract.^ 

In  this  latter  class  of  cases,  of  course,  the  public  body 
may  ratify  the  contract,^  but  where  the  pubhc  body  had 
no   power   to   enter   into   the   contract,    such   a   contract 

1  Baltimore  v.  Musgrave,  48  Md.  272,  30  Am.  R.  458;  May  v.  Chicago,  124 
111.  App.  527,  222  111.  595,  78  N.  E.  912;  Smith  &  Co.  v.  Denver,  20  Colo.  84, 
36  Pac.  844;  Nesbit  v.  Riverside  &c.  Dist.,  144  U.  S.  610,  36  L.  Ed.  562,  aff'ff 
25  Fed.  635;  Moore  v.  Detroit,  164  Mich.  543,  129  N.  W.  715. 

2  Peters  v.  St.  Louis,  226  Mo.  62,  125  S.  W.  1134;  Cits  Bk.  i;.  Spencer,  126 
Iowa  101,  101  N.  W.  643. 

3  Floyd  County  v.  Allen,  137  Ky.  575,  126  S.  W.  124;  Baltimore  v.  Reynolds^ 
20  Md.  1,  83  Am.  Dec.  535. 

*  Marsh  t;.  Fulton  County,  77  U.  S.  676,  19  L.  Ed.  1040. 

26 


CHAP.  V  ]  POWERS   OF    OFFICERS  [  §  H 

cannot  be  ratified  except  by  the  legislature.'  It  is  no 
defense  for  a  contractor  to  say  that  he  presumed  that  the 
agents  of  the  public  body  transacted  their  business  prop- 
erly and  under  sufficient  authority,  as  that  principle  of 
the  law  of  agency  has  no  application  to  officers  and  agents 
of  a  public  body  where  powers  are  defined  by  statute.- 
Nor  may  a  contractor  rely  upon  a  claim  by  him  that  the 
public  officials  have  frequently  before  made  similar  trans- 
actions for,  however  common  such  occasions  they  cannot 
establish  a  usage  in  cases  not  authorized.  Custom  cannot 
be  made  the  substitute  for  undelegated  authority.^  And 
the  receipt  of  the  benefits  will  not  imply  a  promise.^  So, 
a  material  man  who  sells  gravel  to  a  city  officer  is  charge- 
able with  knowledge  of  his  power  to  contract,^  and  where 
he  had  no  power,  and  the  gravel  has  been  used  in  mending 
the  streets  and  cannot  be  returned  specifically,  there 
arises  no  liability  of  any  kind,  not  even  for  reasonable 
value.^  Though  if  the  material  as  such  was  in  the  city's 
possession  when  the  action  was  begun  it  would  have  had 
to  return  it  or  pay  for  it.^  Public  authorities  who  have 
charge  of  the  sale  of  a^  building  cannot  bind  the  public 
body  by  a  guaranty   which   differs  from   the   conditions 

1  Re  Niland,  193  N.  Y.  180, 85  N.  E.  1012;  Peterson  v.  New  York,  17  N.  Y. 
449;  Lyddy  v.  Long  Island  City,  104  N.  Y.  218,  10  N.  E.  155. 

2  McDonald  v.  Mayor,  68  N.  Y.  23;  Smith  v.  Newburgh,  77  N,  Y.  137. 

3  Delafield  v.  State  of  Illinois,  26  Wend.  192;  The  Floyd  Acceptances,  74 
U.  S.  (7  WaU.)  666,  677. 19  L.  Ed.  169;  Wormstead  v.  Lynn,  184  Mass.  425,  68 
N.  E.  841. 

*  McDonald  v.  Mayor,  68  N.  Y.  23;  Dickinson  v.  Poughkeepsie,  75  N.  Y. 
65;  Appleton  W.  Wks.  Co.  v.  Appleton,  132  Wis.  563,  113  N.  W.  44;  O'Rourke 
V.  Phila.,  211  Pa.  79,  60  Atl.  499. 

6  Bartlett  v.  Lowell,  201  Mass.  151,  87  N.  E.  195;  see  Osgood  v.  Boston,  165 
Mass.  281,  43  N.  E.  108;  Roberts  v.  Fargo,  10  N.  D.  230,  86  N.  W.  726;  Ecroyd 
V.  CoggeshaU,  21  R.  I.  1,  41  Atl.  260. 

*  Bartlett  v.  Lowell,  supra;  See  Des  Moines  v.  Spencer,  126  Iowa,  101, 101  N. 
W.  643;  Keating  v.  Kansas  City,  84  Mo.  415;  Tumey  v.  Bridgeport,  52  Conn. 
412,  12  Atl.  520. 

7  Bartlett  v.  LoweU,  201  Mass.  151,  87  N.  E.  195. 

27 


§11]  THE   POWER  TO   CONTRACT  [  PART  I 

set  out  in  the  ordinance  authorizing  such  officials  to  act.* 
Nor  may  selectmen  bind  a  city  to  pay  for  meals  procured 
from  the  keeper  of  a  restaurant  while  in  session  under 
a  statute  which  provided  compensation  per  hour  and  their 
necessary  expenses.-  The  agent  of  a  public  body  who 
undertakes  to  bind  it  by  contract  must  show  authority  for 
his  action  therefor  and  a  contract  made  beyond  his  powers 
is  void.^  The  authority  which  he  rehes  upon  may  come 
either  from  the  legislature  or  from  the  general  governing 
body  of  the  municipaUty.  The  latter  may  authorize  appro- 
priate agencies  to  make  contracts  when  not  Hmited  or 
restricted  and  the  acts  of  such  agents  will  bind.^ 

But  while  it  is  true  that  if  a  public  officer  acts  outside 
of  the  scope  of  his  official  authority  given  him  by  law, 
the  public  body  which  he  represents  will  not  be  bound 
by  his  acts,^  yet  where  a  specific  law  is  not  the  source 
of  his  authority,  but  rather  he  receives  it  from  the  con- 
tract, which  is  authorized  by  law,  necessarily  entered  into 
and  conducted  by  the  officers  of  the  public  body,  they 
must  necessarily  have  such  powers  as  will  make  the  con- 
tract effective  in  its  beginning  and  progress,  and  the  pubUc 
body  will  accordingly  be  bound  by  its  exercise.^    Again 

1  Osgood  V.  Boston,  165  Mass.  281,  43  N.  E.  108. 

2  Heublein  Bros.  v.  New  Haven,  75  Conn.  545,  54  Atl.  298. 

3  Burchfield  v.  New  Orleans,  42  La.  Ann.  235,  7  So.  448;  Black  v.  Detroit,  119 
Mich.  571,  78  N.  W.  660;  Cheeny  v.  Brookfield,  60  Mo.  53;  Farrellt;.  Coates- 
ville,  214  Pa.  St.  296,  63  Atl.  742;  Wahl  v.  Milwaukee,  23  Wis.  272;  Ross  v. 
Long  Branch,  73  N.  J.  L.  292,  63  Atl.  609;  Friedenstein  v.  U.  S.,  35  Ct. 
CI.  1. 

4  Donovan  v.  N.  Y.,  33  N.  Y.  291;  Walsh  v.  Columbus,  36  Ohio  St. 
169. 

6  State  Trust  Co.  v.  Duluth,  104  Fed.  632;  Wisconsin  Cent.  R.  Co.  v.  U.  S., 
164  U.  S.  190,  212,  41  L.  Ed.  399,  aff'g  27  Ct.  CI.  440;  Ft.  Edward  v.  Fish, 
156  N.  Y.  303,  50  N.  E.  973;  Logan  County  v.  U.  S.,  169  U.  S.  255,  42  L.  Ed. 
737,  aff'g  31  Ct.  CI.  23;  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed. 
312. 

«  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312;  Brady  v.  Mayor, 
132  X.  Y.  415,  30  N.  E.  757;  Messenger  v.  Buffalo,  21  N.  Y.  196. 

28 


CHAP.  V  ]  POWERS   OF   OFFICERS  [  §  12 

the  public  body  may  so  deal  with  third  persons  as  to 
justify  them  in  assuming  the  existence  of  an  authority  in 
another,  which  in  fact  has  never  been  given. ^  Where  the 
circumstances  of  the  contract  require  the  affirmative  duty 
of  the  public  body  to  act  and  it  fails  to  act  with  reference 
to  the  subject-matter,  it  will  be  assumed  that  the  con- 
tinued receipt  of  the  fruits  and  benefits  of  the  contract 
was  by  its  authority  and  acquiescence.^ 

§  12.  When   Public   Body   is   Bound   by  Acts   of  Public 
Officers. 

Public  bodies  are  not  bound  by  the  acts  of  their  officers 
in  making  unauthorized  changes  in  public  contracts. 
Individuals  as  well  as  courts  must  take  notice  of  the  ex- 
tent of  the  authority  conferred  by  law  upon  a  person 
acting  in  an  official  capacity.  Ignorance  of  the  law  fur- 
nishes no  excuse  for  any  mistake  or  wrongful  act.^  Differ- 
ent rules  prevail  in  respect  to  the  acts  and  declarations  of 
pubHc  agents  from  those  governing  in  the  case  of  private 
agents.  Principals  of  the  latter  are  often  bound  by  the 
acts  and  declarations  of  their  agents  even  where  the  act  or 
declaration  was  done  or  made  without  any  authority,  if  it 
appear  that  the  act  was  done,  or  the  declaration  made,  in 
the  regular  course  of  employment.  But  pubhc  bodies  or 
the  public  authority  are  not  bound  in  such  a  case  unless  it 
manifestly  appears  that  the  agent  was  acting  within  the 

1  Davies  v.  N.  Y.,  93  N.  Y.  250;  see  Van  Dolsen  v.  Bd.  of  Educ,  162  N.  Y. 
446,  56  N.  E.  990. 

2  Davies  v.  N.  Y.,  93  N.  Y.  250. 

3  Hawkins  v.  U.  S.,  96  U.  S.  689,  24  L.  Ed.  607,  aff'g  12  Ct.  CI.  181 ;  Whiteside 
V  U.  S.,  93  U.  S.  247,  23  L.  Ed.  882,  aff'g  8  Ct.  CI.  532;  Logan  County  v.  U.  S., 
169  U.  S.  255,  42  L.  Ed.  737,  aff'g  31  Ct.  CI.  23;  Maryland  Steel  Co.  v.  U.  S., 
235  U.  S.  451,  59  L.  Ed.  312;  State  ex  rel.  v.  Hays,  52  Mo.  578;  Delafield  v. 
Illinois,  26  Wend.  192;  Baltimore  v.  Reynolds,  20  Md.  1,  83  Am.  Dec. 
535. 

29 


§  12  ]  THE  POWER  TO  CONTRACT         [  PART  I 

scope  of  his  authority,  or  that  he  had  been  held  out  as 
having  authority  to  do  the  act,  or  make  the  declaration, 
for  or  on  behalf  of  the  public  authorities.^ 

Public  officials  cannot  bind  public  bodies  either  by 
making  or  ratifying  a  fraudulent  contract  -  or  an  illegal 
contract.^  Boards  of  audit  even  in  allowing  accounts  are 
hmited  to  the  powers  conferred  and  when  they  transgress 
their  Umitations,  their  acts  are  void."*  An  illegal  audit  can 
be  attacked  either  directly  or  collaterally  because  it  is 
void.  But  an  audit  based  upon  a  legal  power  to  act,  but 
erroneous  as  to  some  matter  of  fact  or  law  is  a  judicial 
determination  under  competent  jurisdiction  and  cannot 
be  reaudited  by  some  other  officer  or  collaterally  at- 
tacked.^ However,  public  officials  may  bind  the  public 
body  of  which  they  are  officers  by  acts  done  or  words 
uttered  when  done  or  spoken  or  uttered  by  an  authorized 
officer  or  agent  who  had  charge  of  the  matter  or  in  the  line 
or  scope  of  his  duty.®  In  the  case  of  contracts,  authorized 
by  law,  and  not  merely  special  law  which  may  limit  and 
control,  and  which  are  necessarily  entered  into  and  con- 
ducted by  officers  of  a  public  body,  they  must  of  necessity 
possess  the  powers  to  make  such  contracts  effective  not 
merely  in  their  beginning  but  in  their  progress  as 
well.  They  therefore  have  authority  to  waive  and 
modify  conditions  of  such  a  contract  and  their  acts  are 
binding.^ 

1  Hawkins  v.  U.  S.,  96  U.  S.  689,  24  L.  Ed.  607,  aff'g  12  Ct.  CI.  181. 

2  Nelson  v.  Mayor,  131  N.  Y.  4,  29  N.  E.  814. 

3  Ft.  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E.  973. 

*  Nelson  v.  Mayor,  supra;  People  ex  rel.  Smith  v.  Clarke,  174  N.  Y.  259, 
262,  263,  66  N.  E.  819. 

*  People  ex  rel.  Smith  v.  Clarke,  supra. 

^  Halbut  V.  Forrest  City,  34  Ark.  246;  Nelson  v.  New  York,  5  N.  Y.  Supp. 
688,  131  N.  Y.  4,  29  N.  E.  814;  Town  Dist.  of  Hardwick  v.  Wolcott,  78  Vt.  23, 
61  Atl.  471;  Maher  v.  Chicago,  38  111.  266. 

'  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312. 

30 


€HAP.  V  ]  POWERS   OF   OFFICERS  [  §  15 

^13.  Public  Officer  Signing  Individually. 

Where  a  contract  is  signed  by  the  officers  of  a  public 
body  with  their  individual  seals  attached  but  it  is  in- 
tended to  be  effectual  as  a  contract  with  the  pubUc  body 
and  its  contractor,  it  will  be  sustained  as  such.^ 

§  14.  Liability  of  Public  Officers. 

No  right  of  action  will  lie  against  a  pubhc  official  for 
failure  to  award  a  contract  to  a  bidder  on  public  work  even 
though  he  acts  maliciously  in  so  doing.-  But  where  his 
refusal  is  not  regarded  in  the  light  of  a  judicial  act  he  must 
act  in  good  faith  in  refusing  the  award. 

§  15.  Agents — Omission  to  Perform  Extrinsic  Act  which 
is  Foundation  of  Authority  to  Act. 
It  is  a  settled  doctrine  of  the  law  of  agency  that  where 
the  principal  has  clothed  his  agent  with  power  to  do  an  act 
upon  the  existence  of  some  extrinsic  fact  necessarily  and 
peculiarly  within  the  knowledge  of  the  agent,  and  of  the 
existence  of  which  the  act  of  executing  the  power  is  itself 
a  representation,  a  third  person  dealing  with  such  agent  in 
entire  good  faith,  pursuant  to  the  apparent  power,  may 
rely  upon  the  representation,  and  the  principal  is  estopped 
from  denying  its  truth  to  his  prejudice.  This  rule  is  of 
course  not  of  universal  application  in  the  case  of  public 
corporations  or  boards  and  must  of  necessity  have  hmited 
application  to  them  because  of  their  prescribed  powers.^ 
It  has,  however,  been  applied  against  towns  in  favor  of 
bona  fide  holders  of  its  obligations." 

1  Parr  v.  Greenbush,  72  N.  Y.  463. 

2  Talbot  Pav.  Co.  v.  Detroit,  109  Mich.  657,  67  N.  W.  979;  East  River  G.  L. 
Co.  V.  Donnelly,  93  N.  Y.  557. 

3  Van  Dolsen  v.  Bd.  of  Education,  162  N.  Y.  446,  56  N.  E.  990. 

*  Solon  V.  Williamsburgh  Sav.  Bank,  114  N.  Y.  122,  21  N.  E.  168;  Bank  of 
Rome  V.  Rome,  19  N.  Y.  20. 

31 


§  15  ]  THE   POWER   TO    CONTRACT  [  PART  I 

It  serves  to  protect  the  innocent  against  the  active  or 
constructive  deceit  of  pubhc  oJ0ficers,  who,  having  the 
power  in  their  discretion  to  do  the  act  lying  at  the  founda- 
tion of  their  authority,  omit  it,  and  fail  to  disclose  the 
omission  but  contract  as  if  there  were  none.  Of  course, 
where  the  act  omitted  or  represented  as  performed  is  not 
within  the  power  of  the  principal  or  agent  to  perform,  the 
rule  cannot  apply.  ^ 

Defenses  by  official  boards  resting  upon  their  omission  to 
do  the  acts  they  had  the  power  to  do  in  order  to  perfect 
the  authority  they  assumed  to  exercise,  are  not  favored 
when  invoked  against  innocent  parties  dealing  with  them 
in  good  faith. 2  Where  a  contract  was  made  but  the  board 
making  it  failed  to  make  an  appropriation  the  contract  will 
not  be  invalidated  where  the  contractor  performed  the 
work  in  good  faith,  without  knowledge  that  the  appropria- 
tion had  not  been  made,  and  he  had  no  means  of  protect- 
ing himself  against  the  exhaustion  of  appropriations  avail- 
able and  sufficient  at  the  time  his  contract  was  made,  but 
which  were  not  specifically  appropriated  to  his  contract 
through  carelessness  until  the  exhaustion  prevented  it  being 
made  at  all.^  The  failure  of  a  contractor  to  file  plans  or 
comply  with  other  similar  requirements  will  not  deprive  a 
contractor  of  his  rights  under  a  contract,  where  there  is  no 
duty  to  perform  the  act,  or  the   duty  rests  on  the  owner.^ 

§  16.  Powers  of  Particular  Officers. 

The  mayor  of  a  city  has  no  general  power  or  any  impHed 

1  Cogw'in  V.  Hancock,  84  N.  Y.  532;  Van  Dolsen  v.  Bd.  of  Education,  supra; 
Wormstead  v.  Lynn,  184  Mass.  425,  68  N.  E.  841. 

2  Moore  v.  Mayor,  73  N.  Y.  238;  ReiUy  v.  Albany,  112  N.  Y.  30,  19  N.  E. 
508;  Van  Dolsen  v.  Bd.  of  Education,  supra. 

'  Van  Dolsen  v.  Bd.  of  Education,  supra;  Davidson  v.  White  Plains,  197 
N.  Y.  266,  90  N.  E.  825;  McGovem  v.  New  York,  185  N.  Y.  App.  Div.  609; 
see  O'Rourke  Eng.  &  Cons.  Co.  v.  New  York,  140  id.  498. 

♦Ordway  v.  Newburyport,  230  Mass.  306,  119  N.  E.  863. 

32 


CHAP.  V  ]  POWERS   OP   OFFICERS  [  §  16 

power  to  bind  the  public  body  by  contract,  and  where  he 
has  power  conferred  upon  him,  he  acts  simply  as  the 
instrument  and  agent  of  the  council,  which  alone  has  power 
to  obUgate  the  city,  and  can  only  bind  it  to  the  extent  of 
the  power  conferred.^  He  cannot  impose  obligations  by 
new  terms  and  conditions  in  the  contract,  nor  has  he  power 
to  change  it  in  any  degree.  In  like  manner,  the  comp- 
troller while  he  is  the  chief  financial  officer  of  the  city  and 
in  some  cities  by  charter  is  given  very  extraordinary  and 
extensive  powers,  can  only  act  within  the  authority  ex- 
pressly given  to  him.^  The  corporation  counsel  or  chief 
law  officer  of  the  city  possesses  only  the  power  of  a  lawyer 
retained  and  can  obhgate  the  pubhc  body  he  represents 
only  in  the  same  manner  as  a  lawyer  may  bind  an  individ- 
ual cHent.^  An  armory  board  has  no  power  to  employ 
an  architect.^ 

1  State  ex  rel.  Keith  v.  Comm.  CouncU,  138  Ind.  455,  37  N.  E.  1041;  Wil- 
loughby  V.  City  CouncU,  51  S.  C.  412,  29  S.  E.  242. 

2  Paul  V.  Seattle,  40  Wash.  294,  82  Pac.  601. 

3  Bank  of  Commerce  v.  Louisville,  174  U.  S.  428,  rev'g  88  Fed.  398;  Bush 
V.  O'Brien,  164  N.  Y.  205,  58  N.  E.  106. 

*Horgan  &  Slattery,  Inc.,  v.  New  York,  114  N.  Y.  App.  Div.  555. 


33 


CHAPTER  VI 

MANNER  OF  EXERCISING  POWERS 

§  17.  When  Manner  Is  or  Is  Not  Prescribed. 

When  the  legislature  grants  to  pubhc  bodies  full  power 
and  unlimited  authority  to  construct  or  erect  pubUc  works 
or  to  do  or  perform  some  act  in  the  carrying  out  of  the 
purposes  and  objects  for  which  they  were  created  and 
prescribes  no  manner  of  making  contracts  necessary  to  the 
exercise  of  such  powers,  the  contract  may  be  made  in  the 
manner  selected  by  the  governing  body  by  a  vote  upon  a 
motion  or  by  the  passage  of  a  resolution  to  that  end,  and 
it  is  not  essential  that  the  contract  be  made  by  ordinance 
to  be  vaHd.^  The  courts  will  not  interfere  with  or  under- 
take to  control  the  manner  of  the  exercise  of  these  powers 
where  the  statute  leaves  the  manner  of  exercising  them  to 
the  governing  body  of  the  municipaUty.- 

But  where  a  pubhc  body  is  authorized  to  make  a  con- 
tract only  in  a  certain  prescribed  manner  and  under  certain 
conditions  or  circumstances  and  the  making  of  the  con- 
tract in  any  other  manner  is  imphedly  excluded,  the  con- 
tract which  does  not  conform  to  the  statute  is  void  and 
no  recovery  will  be  permitted  even  upon  an  impUed 
hability  to  pay  for  benefits  received  under  the  contract.^ 

A  practice  or  custom  of  the  officers  of  pubhc  bodies 

1  San  Francisco  G.  Co.  v.  San  Francisco,  9  Cal.  453. 

2  Admiral  Realty  Co.  v.  New  York,  200  N.  Y.  110,  99  N.  E.  241;  Perry  v. 
Town  of  Panama  City,  67  Fla.  285,  65  So.  6. 

3  McDonald  v.  New  York,  68  N.  Y.  23;  New  Jersey  Car.  Spr.  &c.  Co.  v. 
Jersey  City,  64  N.  J.  L.  544,  46  Atl.  649;  Wellston  v.  Morgan,  65  Ohio  St. 
219,  62  N.  E.  127;  Bosworth-Chanute  Co.  v.  Brighton,  272  Fed.  964. 

34 


CHAP.  VI  ]         MANNER   OF   EXERCISING    POWERS  [  §  18 

in  transacting  business,  not  in  strict  compliance  with  the 
requirements  of  its  charter,  cannot  bind  such  pubUc  bodies 
on  a  contract  not  executed  or  authorized  in  the  manner 
provided  by  such  charter.^ 

A  seal  is  unnecessary  to  the  vaHd  exercise  of  the  power 
to  contract.^  But  if  the  statute  provides  for  a  vote  of 
the  taxpayers,  or  a  prior  appropriation  or  a  certificate 
of  the  head  of  a  department  as  a  prerequisite  to  the  mak- 
ing of  the  contract  the  failure  to  fulfill  these  conditions  will 
avoid  the  contract. 

§  18.  Defects  in  Preliminary  Proceedings. 

If  the  charter  or  statutes  require  certain  acts  to  be 
performed  before  pubhc  contracts  may  lawfully  be  let,  the 
omission  to  comply  with  these  requirements  will  invaUdate 
the  contract.^  But  where  the  defect  is  only  technical,  or  a 
trivial  defect  in  the  notice,  such  a  slight  departure  from 
the  authority  conferred  will  not  be  allowed  to  operate  so  as 
to  destroy  the  whole  proceeding.''  And  where  the  public 
body  has  the  power  to  contract  for  the  subject-matter  in 
hand  and  the  express  contract  is  invalid  for  some  irreg- 
ularity in  its  execution  it  will  be  hable  on  an  implied 
contract  for  the  benefits  received.^  But  where  the  statute 
provides  that  the  work  or  improvement  shall  be  let  by 
separate  contract  for  each  particular  work  this  is  an  essen- 

1  Paul  V.  City  of  Seattle,  40  Wash.  294,  82  Pac.  601;  Wormstead  v.  Lynn, 
184  Mass.  425,  68  N.  E.  841. 

2  Draper  v.  Springport,  104  U.  S.  501,  26  L.  Ed.  812;  Rumford  Dist.  v. 
Wood,  13  Mass.  193. 

3  People  ex  rei.  J.  B.  Lyon  Co.  f .  McDonough,  173  N.  Y.  181,  65  N.  E.963; 
Cits.  Bk.  V.  Spencer,  126  Iowa,  101,  101  N.  W.  643;  HaU  v.  Chippewa  Falls, 
47  Wis.  267,  2  N.  W.  279;  Rork  v.  Smith,  55  Wis.  67,  12  N.  W.  408. 

4  Portland  Lumbering  Co.  v.  East  Portland,  18  Oreg.  21,  22  Pac.  536. 

5  San  Francisco  G.  L.  Co.  v.  San  Francisco,  9  Cal.  453;  Boyd  v.  Black  Sch. 
Tp.,  123  Ind.  1,  23  N.  E.  862;  Kramrath  v.  Albany,  127  N.  Y.  575,  28  N.  E. 
400;  Long  v.  Lemoyne,  222  Pa.  311,  71  Atl.  211. 

35 


§  18  ]  THE  POWER  TO  CONTRACT         [  PART  I 

tial  part  of  the  legislative  scheme  and  if  not  observed  will 
be  fatal  to  an  assessment  for  the  improvement.^ 

§19.  Failure  to  Follow  Statute — Unimportant  Variances. 

WTien  a  statute  under  which  a  public  body  makes  its 
contract  prescribes  special  formaUties,  these  must  be  com- 
pUed  with  or  the  contract  will  be  void.  These  require- 
ments of  the  statute  must  be  substantially  complied  with 
to  render  the  acts  of  public  officers  vahd.  But  such  pro- 
\"isions  need  not  be  literally  performed  in  unessential 
particulars,  where  there  has  been  a  substantial  comphance 
which  answers  the  purpose  or  intent  of  the  statute.  The 
failure  therefore  to  annex  a  guaranty  for  the  proper  per- 
formance of  a  contract  in  the  precise  language  of  the 
statute  is  an  unimportant  variance  which  does  not  render 
the  contract  in  vahd.  ^ 

1  People  ex  rel.  O'Reilly  v.  Comm.  Council,  189  N.  Y.  66,  81  N.  E.  557. 

2  People  ex  rel.  J.  B.  Lyon  Co.  v.  McDonough,  173  N.  Y.  181,  65  N,  E.  963. 


36 


CHAPTER  VII 

GIFTS  TO  PUBLIC  BODY  TO  INDUCE  EXERCISE  OF  POWERS 

§  20.  Gifts   for  Location   of  Public  Buildings. 

Where  public  authorities  charged  with  the  duty  of  lo- 
cating public  structures  are  confronted  with  inducements 
of  money  aid  to  erect  the  structures,  provided  they  are 
erected  in  a  certain  locality,  there  can  be  no  impropriety  or 
illegahty  in  their  taking  such  offers  into  consideration 
in  making  a  choice  of  location.  Nor  will  such  proposed 
aid  be  against  pubUc  policy.  Of  course,  pubHc  officials 
in  the  performance  of  their  duty  should  keep  perfect  free- 
dom of  judgment  so  that  public  welfare  and  not  the 
private  gain  of  others  shall  control  their  judgments. 

If  in  the  selection  of  a  site  to  locate  courthouses  or  other 
pubhc  buildings,  the  public  officials  keep  within  these 
limitations,  there  can  be  no  objection  to  receiving  a  dona- 
tion of  land  upon  which  to  erect  the  structure,  as  a  con- 
sideration for  such  selection.^ 

Indeed  in  many  jurisdictions  statutes  have  been  passed 
fixing  the  location  of  the  State  House  at  a  certain  city 
provided  the  inhabitants  would  subscribe  a  certain  sum  of 
money  toward  its  erection  and  these  subscriptions  have 
been  upheld  as  based  upon  a  sufficient  consideration  and 
as  not  offending  public  policy.-  But  where  a  pubhc  official, 
before   his   appointment   to    office   in    consideration   of   a 

iStilson  V.  Lawrence  County,  52  Ind.  213;  Island  County  v.  Babcock,  17 
Wash.  438,  50  Pac.  54;  Wisner  v.  McBride,  49  Iowa,  220;  Odineal  v.  Barry, 
24  Miss.  9. 

2  Carpenter  v.  Mather,  4  lU.  374;  State  Treas.  v.  Cross,  9  Vt.  289. 

37 


§  20  ]  THE    POWER    TO    CONTRACT  [  PART  I 

nominal  rental  agrees  to  keep  the  post  office  in  a  certain 
location  so  long  as  he  remains  in  office,  such  agreement  is 
void  since  the  contract  amounts  to  a  sale  of  the  exercise  of 
his  judgment  for  private  emolument.^ 

It  has,  however,  been  held  that  an  agreement  by  a 
municipaUty  to  locate  its  city  hall  and  market  house  at 
a  certain  place  in  consideration  of  a  donation  toward 
the  expense  of  its  erection  was  void  as  against  public 
pohcy.^ 

§  21.  Gifts  for  Location  of  Public  Buildings — Is  it  Bribery? 

The  donation  of  land  or  money  for  the  location  of  public 
buildings  and  the  erection  thereof  is  in  general  not  to  be 
considered  against  public  policy,  and  is  not  bribery.^  In 
hke  manner,  an  offer  of  money  to  change  the  county  seat 
will  not  be  deemed  either  a  bribe  or  opposed  to  public 
pohcy.* 

Where  the  action  of  the  officials  in  charge  of  the  project 
is  influenced  solely  by  reason  of  the  financial  aid  given  by 
individuals,  the  entire  scheme  will  on  that  account  be 
void,^  as  in  the  nature  of  a  bribe.  But  gifts  of  this 
character  are  not  necessarily  illegal  or  contrary  to  pubhc 
policy  where  some  advantage  results  to  the  pubhc.  If 
there  is  a  degree  of  public  benefit  likely  to  spring  out  of  the 
enterprise  all  questions  of  poHcy  in  carrying  it  out  devolve 
upon  the  legislative  or  governing  body  in  whose  keeping 
the  discretion  to  adopt  such  enterprise  is  reposed,  and  the 

iSpence  v.  Harvey,  22  Cal.  336;  Benson  v.  Bawden,  149  Mich.  584,  113 
N.  W.  20. 

2  Edwards  v.  Goldsboro,  141  N.  C.  60,  53  S.  E.  652. 

« State  V.  Elting,  29  Kan.  397;  Dishon  v.  Smith,  10  Iowa,  212;  Commrs.  v. 
Hunt,  5  Ohio  St.  488;  Adams  v.  Logan  County,  11  111.  336. 

^  Stillson  V.  Lawrence  County  Commrs.,  52  Ind.  213;  Hall  v.  Marshall, 
80  Ky.  552. 

'  Edwards  v.  Goldsboro,  141  N.  C.  60,  53  S.  E.  652. 

38 


CHAP.  VII  ]  GIFTS   TO   PUBLIC   BODY  [  §  22 

exercise  of  discretion  by  such  public  body  cannot  be  con- 
trolled by  the  courts.^ 

Accordingly,  a  note  given  to  a  board  of  education  to 
purchase  a  library  site  or  books  in  the  discretion  of  the 
board  is  valid  as  a  gift  and  does  not  influence  the  action 
of  the  board  in  the  performance  of  its  official  duty  and  is 
not  against  pubHc  policy  where  the  board  had  previously 
determined  the  question,  but  were  unable  to  proceed  with 
their  project  owing  to  lack  of  funds  which  were  thus  sup- 
plied.2  And  a  municipahty  may  deed  land  to  the  State  for 
an  armory,  reserving  the  right  to  use  the  armory  for  pur- 
poses of  drill  by  its  poUce  and  fire  departments.^ 

§  22.  Gifts  to  Public  Body  in  Consideration  of  Street 
Improvement. 
A  gift  of  money  or  land  as  consideration  for  laying 
out  of  a  street  or  highway  or  for  the  location  of  it  in  a 
particular  place  cannot  in  the  absence  of  proof  of  corrupt 
action,  be  regarded  as  a  bribe  to  influence  official  action 
or  as  against  public  poHcy."  The  location  and  laying 
out  of  highways  is  a  matter  of  public  concern  and  projects 
relating  to  such  affairs  are  in  the  public  interest  and 
promotive  of  the  public  welfare.  So,  an  offer  to  contribute 
money  by  a  private  citizen  to  pay  a  portion  of  the  cost  of 
laying  out  a  street  is  not  opposed  to  public  policy,  but,  on 
the  other  hand  since  it  diminishes  the  expense  falling  upon 
the  public  is  a  gain  for  the  pubHc.  Its  acceptance  apart 
from  direct  proof  of  fraud  or  corruption,  cannot  be  con- 
sidered to  be  a  bribe  to  influence  the  general  governing 

1  State  V.  Mayor  of  Orange,  54  N.  J.  L.  HI,  22  Atl.  1004. 

2  Kansas  City  Sch.  Dist.  v.  Sheidley,  138  Mo.  672,  40  S.  W.  656. 

3  State  ex  rel.  v.  Turner,  93  Ohio  St.  379,  113  N.  E.  327. 

4  State  ex  rel.  v.  Mayor  of  Orange,  54  N.  J.  L.  Ill,  22  Atl.  1004,  14  L.  R.  A. 
62. 

39 


§  22  ]  THE  POWER  TO  CONTRACT         [  PART  I 

body  to  whom  is  delegated  the  discretionary  power  of 
laying  out  and  locating  streets.^  While  earlier  cases  seem 
to  have  taken  the  view  that  mere  proof  of  a  gift  would  be 
sufficient  to  move  the  courts  to  interfere  with  the  exercise 
of  such  discretion,-  the  later  and  more  modern  opinion  is 
that  the  gift  is  vaUd  and  not  contrary  to  public  policy.^ 
A  mere  offer  to  donate  so  much  of  an  owner's  land  as  is 
contemplated  to  be  taken  in  a  proceeding  to  widen  the 
street  cannot  be  considered  to  invalidate  the  decision  of 
the  pubhc  body  to  make  the  widening.^  It  is  only  when 
the  acceptance  is  upon  a  condition  which  amounts  to  a 
surrender  or  barter  of  some  legislative  discretion,^  or  when 
fraud  or  corruption  is  shown  that  such  a  donation  is 
invaUd. 

^  Idem.    See  cases  cited. 

2Comm.  V.  Cambridge,  7  Mass.  158;  Smith  v.  Conway,  17  N.  H.  586. 

3  Patridge  v.  Ballard,  2  Me.  50;  Crockett  v.  Boston,  59  Mass.  182;  Ford  v. 
North  Des  Moines,  80  Iowa,  626,  45  N.  W.  1031;  Springfield  v.  Harris,  107 
Mass.  532;  Townsend  v.  Hoyle,  20  Conn.  1;  Pepin  Co.  v.  Prindle,  61  Wis.  301, 
21  N.  W.  254. 

*  Crockett  v.  Boston,  supra. 

6  Penley  v.  Auburn,  85  Me.  278,  27  Atl.  158. 


40 


CHAPTER  VIII 

POWER    TO     ENGAGE    IN    OR    TO    AID    PRIVATE    ENTERPRISE 

§  23.  Engaging  in  Private  Enterprise — Rule  Stated. 

Municipalities  are  agents  of  the  State  intrusted  with 
certain  powers  of  government  to  be  exercised  for  public 
uses  and  purposes  and  they  must  keep  within  the  limits  of 
delegated  power  and  function  only  for  the  purposes  and 
objects  for  which  they  were  created. 

These  governmental  purposes  not  only  include  the  pro- 
tection of  life,  liberty  and  property,  but  also  the  promotion 
of  health,  convenience,  comfort  and  welfare  of  its  inhabi- 
tants. Municipalities  possess  no  power  to  invade  the 
sphere  of  purely  private  enterprise  and  engage  in  com- 
mercial activities  wholly  disconnected  from  public  needs 
and  public  purposes.  PubUc  moneys  may  only  be  ap- 
propriated and  expended  for  a  public  purpose.  It  is, 
indeed,  difficult  to  say  where  governmental  purposes  and 
functions  end  and  private  enterprise  begins.  Our  views 
in  this  respect  have  been  altered  very  considerably  in  the 
past  few  decades  of  progressive  and  energetic  activity 
to  keep  pace  with  the  needs  of  our  growth  and  the  ability 
of  inventive  genius  in  this  age  of  invention  to  supply 
them.  The  wants  of  to-day  are  entirely  different  from 
those  of  a  century  ago,  and  as  another  century  of  develop- 
ment is  put  behind  us  in  the  onward  march  of  events, 
new  needs  undreamed  of  now  will  he  before  the  govern- 
mental authorities  of  the  future.    Tempora  mutantur  et 

41 


§  23  ]  THE  POWER  TO  CONTRACT         [  PART  I 

nos  mutamur  in  illis.    The  genius  of  our  government  is  the 
ability  to  temporize. 

§  24.  History  of  Development  of  Municipal  Enterprise. 

It  is  not  so  long  ago  in  the  story  of  our  advance  that 
decisions  may  be  encountered  which  deny  even  the  right 
to  supply  water  to  our  municipalities,  as  a  power  to  be 
implied  from  general  powers,  and  that  in  order  to  be  able 
to  furnish  to  its  inhabitants  so  great  a  need  as  water, 
the  power  to  supply  it  must  be  conferred  in  express  terms. 
It  was  said  that  the  matter  of  furnishing  water  was  the 
duty  of  each  indi\ddual.  But  this  could  not  with  wisdom 
and  sense  be  said  to-day.  Each  citizen  could  not  build 
a  well  in  his  back  yard,  for  modern  apartment  houses  in 
our  large  cities  with  their  numberless  tenants  leave  no 
back  yard  of  any  size,  and  if  the  individual  could  dig 
a  well,  the  supply  would  be  utterly  insufficient  from  sub- 
terranean sources  with  his  neighbors  every  few  feet  away 
tapping  his  supply.  And  if  he  could  obtain  a  supply,  it 
would  probably  be  polluted  and  poisoned  by  gas  seeping 
through  the  ground  from  leaking  gas  mains  so  that  it 
would  be  utterly  unfit  for  human  consumption.  What 
answer  would  a  city  which  consumes  as  does  the  city  of 
New  York,  six  hundred  fifty  million  gallons  daily  make 
to  such  a  ruling?  Her  necessities  would  compel  the  courts 
to  imply  such  a  power  from  the  most  general  grant  of 
powers.  Circumstances  would  compel  the  courts  to  alter 
their  views  in  the  face  of  a  controHing  necessity.  The 
growth  in  these  pubUc  uses  has  been  exceptional.  From 
the  private  well  and  the  town  pump,  was  evolved  the 
private  water  company  which  has  almost  wholly  dis- 
appeared, and  municipal  ownership  and  operation  of 
waterworks    is    everywhere    the    recognized    rule    under 

42 


CHAP.  VIII  ]  PEIVATE   ENTERPRISE  [  §  24 

controlling  and  imperative  necessity  which  makes  them 
essential  to  the  very  existence  of  our  cities  in  these  times. 
In  the  same  way  from  the  candle  and  the  paper  lighter  to 
the  kerosene  lamp  and  beyond  it  to  gas  and  electricity,  om* 
towns  and  cities  have  grown  to  the  point  where  it  is 
recognized  that  the  legislatures  have  full  power  to  author- 
ize the  ownership  and  erection  of  Hghting  plants.  And  so 
essential  is  the  use  of  this  commodity  that  from  very 
general  powers  to  furnish  a  supply  to  the  municipality,  the 
courts  have  held  municipalities  were  entitled  to  sell  the 
products  of  these  plants  to  its  inhabitants.  In  like 
manner,  the  power  to  furnish  gas  and  electricity  to  Hght 
its  streets  and  to  sell  to  its  inhabitants  for  Hghting  pur- 
poses has  been  declared  to  be  impressed  with  a  pubHc 
use  for  which  public  money  could  be  lawfully  expended. 
And  while  the  courts  were  wrestling  with  the  problem  as 
to  whether  the  city  of  Toledo  could  engage  in  the  munic- 
ipal ownership  and  operation  of  natural  gas  works  to 
furnish  gas  for  public  and  private  use  and  consumption 
and  to  thereby  furnish  fuel  to  its  inhabitants  for  heating 
purposes,  every  one  of  these  municipalities  engaged  in 
selling  electricity  for  lighting  purposes  without  amend- 
ment of  charter  by  the  legislature,  but  through  the 
agency  of  invention,  were  put  into  the  heating  business 
by  the  invention  of  electric  heaters,  electric  stoves 
and  irons,  curlers,  toasters  and  other  uses  ad  lib.  Al- 
though it  was  not  intended  that  these  municipalities 
should  sell  heat  but  only  light,  the  current  sold  is  used 
for  all  purposes  of  heat  and  light  which  modern  invention 
admits. 

But  in  the  case  referred  to,^  it  was  determined  that  heat 

1  State  ex  rel.  Atty.-Gen.  v.  Toledo,  48  Ohio  St.  112,  26  N.  E.  1061, 11  L.  R.  A. 

729. 

43 


§  24  ]  THE   POWER  TO   CONTRACT  [  PART  I 

was  an  indispensable  agency  of  public  health,  comfort  and 
convenience  of  every  inhabitant  of  our  cities  and  that  the 
imposition  of  taxes  to  meet  the  cost  of  erecting  a  plant  to 
supply  gas  for  heating  uses  was  a  public  purpose,  even 
though  a  new  object  of  municipal  policy. 

It  was  also  determined  in  deciding  whether  the  objects 
for  which  taxes  are  assessed,  constitute  a  public  or  a 
private  purpose,  that  the  courts  cannot  leave  out  of  sight 
the  progress  of  society,  the  change  of  manners  and  cus- 
toms, the  development  and  growth  of  new  wants,  natural 
and  artificial,  which  may  from  time  to  time  call  for  a  new 
exercise  of  legislative  power,  and  that  courts  are  not  bound 
by  the  objects  for  which  taxes  have  been  customarily 
levied  in  other  times. 

Similarly,  under  stress  of  great  public  necessity  the 
statute  which  authorized  the  city  of  New  York  to  build 
its  subways  was  upheld.  That  city,  built  on  a  narrow 
strip  of  island,  with  all  of  its  business  and  congestion  at 
one  end,  was  in  dire  distress  for  need  of  transit  facilities. 
The  Rapid  Transit  Act  authorized  the  formation  of  a 
company  to  construct  a  subway.  The  Conunissioners 
appointed  laid  out  the  route  and  tried  to  induce  private 
capital  to  construct  and  operate  it.  But  private  enter- 
prise and  capital '  would  not  construct  it  and  the  city 
either  had  to^biiild  it  itself  or  go  without  it  despite  its 
needs  because :  of  the  crowded  and  congested  condition  of 
travel.  Sincelthe^work  was  authorized  by  the  legislature, 
was  necessary  .'and 'required  for  the  welfare  of  the  people, 
and  was  pubUc  in  character,  the  act  was  sustained  as 
promoting  a  lawful  municipal  purpose.^  To  those  who 
know  the  situation  in  the  city  of  New  York,  it  is  manifest 

1  Sun  Print.  &  Pub.  Ass'n  v.  Mayor  of  New  York,  152  N.  Y.  257,  46  N.  E. 
499. 

44 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  25 

that  it  would  have  been  a  calamity  of  the  highest  degree 
had  the  legislation  not  been  sustained.  5 

Thus  the  providing  of  water,  hght,  heat  and  impliedly 
fuel  and  transportation  have  been  sustained  as  legitmate 
objects  of  municipal  enterprise  each  impressed  with  a 
public  purpose  for  which  money  raised  by  taxation  may  be 
expended. 

§  25.  History  of  Municipal  Enterprise — View  of  Courts — 
Too  Narrow. 
The  evolution  of  the  engaging  by  municipalities  in 
commercial  enterprise  seems  to  be  by  challenge.  One 
case  denies  a  municipaUty  the  right  to  engage  in  the  busi- 
ness of  plumbing  and  suggests  the  utter  impossibility 
of  impljang  the  right  to  sell  ice  as  an  incident  to  the  power 
to  supply  water.  ^  But  straightaway  it  is  decided  and 
in  the  same  jurisdiction  that  ice  is  but  water  in  another 
form  and  it  is  necessary  to  the  health  of  the  people  of  the 
southern  climate  of  Georgia,  and  at  once  the  municipahty 
is  set  up  in  the  ice  business.^  Another  case  allows  the  sale 
of  natural  gas  or  fuel  and  derides  by  challenge  the  possibil- 
ity of  municipaUties  engaging  in  the  business  of  mining  and 
selling  coal.^  Iimnediately  but  quite  independently  the 
query  is  answered  in  another  case,  if  ice  is  necessary  to  the 
health  of  Georgia,  a  southern  climate,  coal  is  necessary  to 
the  health  of  Maine,  a  northern  climate.''  The  Ohio  court 
argues  that  coal  can  be  transported  by  ordinary  channels  of 
transportation  and  at  slight  expense,  while  natural  gas  must 
be  carried  through  pipes  in  the  streets  and  by  machinery 
and  plant  purchased  at  great  expense  beyond  the  enterprise 

1  Keen  v.  Waycross,  101  Ga.  588,  29  S.  E.  42. 

2  Holton  V.  CamiUa,  134  Ga.  560,  68  S.  E.  472. 

'  State  ex  rel.  Atty.  Gen.  v.  Toledo,  48  Ohio  St.  112,  11  L.  R.  A.  729. 
<  Laughlin  v.  Portland,  111  Me.  486,  90  Atl.  318. 

45 


§  25  ]  THE  POWER  TO  CONTRACT         [  PART  I 

and  capital  of  the  individual.^  Immediately  the  Maine 
com't,  but  quite  unconscious  of  the  other  court's  atti- 
tude, answers  that  coal  fuel  is  a  monopoly  and  that 
the  use  of  the  streets  for  pipes  is  not  the  test  by  which 
the  use  is  to  be  determined  to  be  pubUc  and  it 
raises  a  question  about  grocery  stores,  meat  markets,  and 
bakeries.^ 

The  city  of  New  York  starts  in  the  bus  business  and  it 
is  declared  to  be  without  power  because  not  granted 
expressly  to  it  by  the  legislature  and,  in  turn,  the  New 
York  court  raises  the  question  that  if  the  Home  Rule  Act 
will  authorize  the  omnibuses,  it  will  authorize  municipal 
markets,  municipal  department  stores,  municipal  drug 
stores.^  If  these  queries  are  prophetic  as  in  the  case  of  ice 
and  coal,  whither  is  municipal  enterprise  bound? 

Courts  in  these  cases  seem  to  have  become  obsessed  with 
the  subject  in  hand,  and  while  holding  it  to  be  a  valid 
exercise  of  municipal  power  close  the  bars  to  every  other 
possible  commodity,  as  an  object  of  municipal  enterprise. 
They  lay  down  tests  which  are  somewhat  artificial  and 
questionable. 

If  the  municipalities  have  the  power  to  regulate  the  sale 
of  liquor  by  establishing  municipal  dispensaries  and  taking 
over  the  exclusive  sale  of  it,^  why  cannot  they  take  over 
the  sale  of  drugs  and  narcotics?  Indeed,  there  is  a  much 
stronger  reason  in  the  case  of  these  drugs,  for  when  co- 
caine enters  the  human  system,  morality  leaves  it.  If 
coal  can  be  sold  to  citizens,  why  not  wood  which  is  just 

1  State  ex  rel.  Atty.  Gen.  v.  Toledo,  supra. 

2  Laughlin  v.  Portland,  supra. 

»  B'klyn  City  Ry.  Co.  v.  Whalen,  191  N.  Y.  App.  Div.  737,  229  N.  Y.  570,  128 
N.  E.  215. 

<  Plumb  V.  Christie,  103  Ga.  686,  30  S.  E.  759;  FarmviUe  v.  Walker,  101  Va. 
323,  43  S.  E.  558. 

46 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  25 

as  essential  for  fuel.  If  coal  and  gas  and  water,  why  not 
milk  and  bread.  No  situation  has  been  quite  so  acute  or 
so  embued  with  necessity  as  has  been  the  milk  and  the  ice 
situation  in  our  larger  cities  in  recent  years.  The  entire 
comfort  and  welfare  of  the  general  population  is  dependent 
during  the  very  warm  summers  upon  a  proper  ice  supply, 
and  the  welfare  and  comfort  of  the  infant  population  de- 
pend upon  a  healthful  milk  and  ice  supply.  The  young 
are  the  assets  of  the  State,  its  future  citizens  upon  whom 
its  future  welfare  will  depend.  Can  it  be  said  that  where 
private  enterprise  fails  through  strikes  or  otherwise  that 
the  municipality  cannot  step  in  under  appropriate  legis- 
lation to  prevent  infant  mortahty  and  engage  in  the  busi- 
ness of  ice  and  milk  supply  by  contracting  for  its  deUvery 
and  taking  charge  of  its  distribution  or  by  municipal  herds 
and  ice  plants.  Indeed,  almost  every  municipaUty  which 
runs  a  penitentiary  or  reformatory  has  a  municipal  herd, 
and  if  it  is  lawful  for  one  use,  it  is  for  the  other  and,  in  the 
latter  case,  it  cannot  be  justified  under  a  claim  of  pohce 
power  as  it  is  not  at  all  essential  to  the  exercise  of  its 
police  power  that  it  shall  maintain  cows  for  a  milk  supply. 
And  it  would  seem  an  anomaly  of  the  deepest  sort  to  say 
that  a  city  could  lawfully  maintain  a  herd  to  supply  pure 
milk  to  criminals  but  it  could  not  maintain  one  for  the 
innocent  babes  who  inhabit  it,  when  the  obUgation  so  to 
do  arises.  To  say  that  a  supply  of  bread  under  proper 
exigencies  may  not  be  furnished  by  a  municipaUty  is  hke- 
wise  untenable. 

Yet  it  is  not  necessary  because  municipalities  have  these 
powers  that  they  should  use  them,  but  it  is  still  competent 
and  proper  to  maintain  that  the  powers  exist.  They  are 
not  new  powers  but  simply  new  exercises  of  powers  always 

possessed. 

47 


§  25  ]  THE  POWER  TO  CONTRACT         [  PART  I 

Eveiyone  is  familiar  with  the  passage  of  the  Home  Rule 
provisions  of  the  Ohio  Constitution  and  the  Home  Rule 
Act  of  New  York  and  what  was  claimed  by  their  sponsors 
could  be  accomplished  under  them.  The  courts  should 
exercise  caution  in  imposing  limitations  upon  the  appUca- 
tion  of  legislative  acts  of  this  character  by  mvoking 
hidden  prohibitions  of  the  Constitution. 

There  is  altogether  too  unscientific  a  handUng  of  this 
entire  question  and  an  utter  disregard  in  most  cases  of  the 
essential  bases  upon  which  its  proper  solution  rests.  These 
suggestions  are  urged  not  so  much  to  uphold  or  encourage 
a  practice  of  using  these  powers  as  they  are  for  a  recogni- 
tion of  the  existence  of  these  powers  and  of  the  prin- 
ciples upon  which  they  rest.  Granting  the  need  in  any 
community  of  any  one  of  the  essential  commodities  of  hfe 
within  the  general  classification  of  fuel,  food  and  clothing, 
it  must  be  admitted  that  as  long  as  they  are  offered  with- 
out discrimination  to  the  general  pubhc  they  are  a  proper 
pubHc  use  for  which  public  moneys  may  be  appropriated, 
and  it  is  indeed  a  rather  feeble  government  which  must 
acknowledge  a  lack  of  power  to  furnish  them.  As  to  the 
exercise  of  this  power  in  competition  with  private  enter- 
prise or  when  private  enterprise  can  act,  unhesitatingly  the 
power  should  not  be  used.  It  must  be  admitted  that  the 
State  and  nation  possess  as  does  every  sovereign  possess 
these  powers  as  a  part  of  its  war  power  to  preserve  its 
existence.  Can  we  say  in  times  of  peace  when,  in  our 
present  complex  civilization,  our  cities  necessarily  depend 
upon  these  articles  of  general  necessity  to  be  furnished 
from  outside,  that  when  the  preservation  of  lives  of  our 
inhabitants  depends  upon  a  proper  supply  of  these  com- 
modities that  the  State  or  its  agencies  cannot  furnish 
them? 

48 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  26 

§  26.  Proper  Objects  of  Home  Rule  Should  be  Attained. 

The  State  as  the  sovereign  has  taken  of  its  omnipotence 
in  the  matter  of  local  self-government  and  conferred  it 
upon  municipalities  as  absolutely  as  it  was  possessed  by 
itself. 

Many  home  rule  acts  have  been  passed  in  various 
States  conferring  upon  locahties  the  time-honored  function 
of  local  self-government.  Some  constitutions  confer  this 
power  absolutely.  The  beneficent  purposes  of  these  acts 
should  be  upheld  when  possible.  They  are  remedial  in 
their  nature  and  should  be  liberally  construed  for  the 
benefit  of  the  public. 

While  agreeing  in  the  result  that  moving  picture  theatres 
are  not  a  public  purpose  for  which  taxes  might  be  im- 
posed,^ it  cannot  be  contended  that  moving  pictures  may 
not  be  used  for  educational  purposes  and  paid  for  out  of 
the  tax  purse.  They  constitute  one  of  our  most  impressive 
educational  mediums  and,  no  doubt,  the  purely  pleasurable 
and  emotional  side  of  this  modern  enterprise  will  some  day 
give  way  to  a  larger  development  of  it  upon  the  educa- 
tional side  when  they  will  come  into  general  use  for  exposi- 
tion in  municipal  auditoriums;  and  certainly  such  a  pur- 
pose would  be  public  and  would  be  authorized  under  the 
broad  powers  of  local  self-government  conferred  by  the 
Home  Rule  Acts.  The  particular  is  included  in  the  general, 
and  when  the  legislature  intended  specific  enterprises 
should  be  undertaken  under  these  broad  general  powers, 
the  courts  should  be  slow  to  curtail  or  suppress  them.  In 
hke  manner,  if  the  broad  powers  conferred  under  the 
New  York  Act  intended  the  right  to  engage  in  the  opera- 
tion of  omnibuses,  the  courts  should  not  send  the  city  to 
the  legislature  to  obtain  the  special  right  already  conferred 
1  State  ex  rel.  Toledo  v.  Lynch,  88  Ohio  St.  71,  102  N.  E.  670. 

49 


§  26  ]  THE  POWER  TO  CONTRACT         [  PART  I 

and  so  intended  by  general  language,  unless  forced  so  to  do 
by  defects  or  omissions  in  the  statute. 

§  27.  Views  of  Justice  Holmes — A  True  Basis. 

The  dissenting  opinion  of  a  distinguished  jurist  in  the 
IMassachusetts  fuel  decision,^  states  the  case  squarely, 
when  read  in  conjunction  with  our  concept  of  government 
which  is  founded  on  the  principle  of  individualism. 

Mr.  Justice  Holmes  declared  that  when  money  was  taken 
to  enable  a  pubhc  body  to  offer  to  the  pubHc  without  dis- 
crimination, an  article  of  general  necessity,  the  purpose 
is  no  less  public  when  that  article  is  wood  or  coal  than 
when  it  is  water,  gas,  electricity  or  education,  to  say  noth- 
ing of  the  cases  of  paupers  or  of  taking  of  land  for  rail- 
roads or  public  markets. 

There  is  and  always  will  be  a  pubhc  necessity  impressed 
upon  certain  articles  of  fuel,  food  or  clothing  ^  and  as  the 
stress  of  times  grow,  with  increasing  populations,  greater 
tendency  to  congregate  in  cities,  disregard  of  agricultural 
and  engaging  in  industrial  pursuits,  the  necessity  will  grow. 
Cities  depending  upon  outside  for  food  supply  may  be 
ultimately  forced  in  the  interest  of  keeping  themselves 
going  to  take  hold  of  the  marketing  of  these  commodities 
which  are  essential  to  their  own  existence.  Civilization  is 
becoming  more  complex  and,  as  the  complexity  increases, 
who  can  foresee  the  needs  of  the  future  and  limit  the  exer- 
cise of  powers  which  those  needs  will  demand?  This 
reasoning  of  this  learned  jurist  is  neither  paternalistic, 
sociahstic,  nor  altruistic.  It  supports  the  doctrine  of 
individuaUsm  and  laissez  faire  and  is  expressed  in  view  of 
the    exigencies    of    to-morrow,    unbhnded    by    visionary 

1  Opinion  of  Justices,  155  Mass.  598,  30  N.  E.  1142. 

2  See  Munn  v.  Illinois,  94  U.  S.  113,  126,  24  L.  Ed.  77,  aff'g  69  lU.  80. 

50 


CHAP.  VIII  ]  PRIVATE    ENTERPRISE  [  §  28 

generalities,  or  doubts  about  the  wisdom  of  the  people 
and  of  their  ultimate  rights  to  exercise  their  own 
powers. 

§  28.  Limitations  on  Municipal  Enterprise — Rules  Con- 
trolling Limitations. 

There  is,  however,  a  proper  line  at  which  these  powers 
must  be  arrested.  It  is  not  the  artificial  boundary  at- 
tempted to  be  made  by  some  of  the  courts  after  they 
themselves  have  crossed  their  own  line  with  their  own 
favorite  commodity.  It  is  not  enough  to  say  that  elec- 
tricity, water  and  gas  can  only  be  produced  by  cooperation 
of  all  the  populace  in  the  erection  of  plants  and  works 
because  of  the  expense  which  individuals  could  not  bear. 
The  cost  will  not  make  the  use  public.  It  is  not  a  proper 
test  to  call  these  commodities  public  because  permission 
must  be  obtained  to  convey  them  through  pipes  and  wires, 
under  or  over  the  public  streets.  As  matter  of  fact,  if 
food  or  fuel  was  sent  through  the  pipes  by  pneumatic  or 
other  agency,  it  would  by  this  operation  become  public 
according  to  this  test. 

If  the  object  is  private,  if  the  business  is  purely  private, 
not  impressed  with  real  public  necessity,  the  public  have  no 
power  to  invest  pubHc  moneys  in  such  speculative  ventures 
or  strictly  commercial  endeavors.  The  commodity  must 
be  one  of  general  public  necessity,  convenience  or  welfare 
and  it  must  be  supplied  without  discrimination  when 
private  enterprise  fails.  These  are  the  only  appropriate 
tests.  Difficulty  of  supply  is  an  artificial  barrier  invented 
by  the  courts  under  legislative  urging  to  meet  what  the 
legislature  deemed  a  public  emergency  when  it  called  upon 
the  court  a  second  time  for  its  opinion.^  It  was  also 
^  See  Massachusetts  fuel  cases,  preceding  sections. 

51 


§  28  ]  THE  POWER  TO  CONTRACT         [  PART  I 

urged  by  the  Maine  court  ^  that  grocery  stores,  meat 
markets  and  bakeries  will  not  fall  within  its  test  of  dif- 
ficultj'  to  obtain  supply.  Difficulty  is  not  the  test  either 
of  the  power  or  the  public  use.  What  could  be  more 
necessitous  than  the  ice  and  milk  supply  which  certainly 
fall  within  the  general  group  of  commercial  activities 
mentioned.  If  coal,  why  not  ice?  Under  the  reasoning  of 
the  Maine  court,  ice  would  immediately  become  both 
difficult  and  necessary.  If  electricity  which  comparatively 
few  use,  why  not  bread  which  all  use?  The  test  should  be 
the  common  sense  view  of  Justice  Holmes  when  private 
enterprise  fails.  He,  with  clear  vision  and  confidence  in 
his  countrymen,  meets  the  issue  on  logical  grounds  undis- 
mayed by  fear  of  sociaUstic  legislation  and  so-called  com- 
munistic activities  of  our  cities. 

§  29.  Implied  Power  to  Engage  in  Private  Business. 

Municipalities  possess  no  implied  power  to  engage  in 
private  enterprise  or  business.^  In  the  exercise  of  its 
private  or  business  functions,  it  must  have  authority 
either  express  or  necessarily  impUed  to  empower  it  to 
engage  in  the  private  or  business  activities  which  munic- 
ipaUties  may  be  authorized  to  assume.^  It  has  been  held 
under  a  narrow  interpretation  of  Home  Rule  grants  that  the 
right  to  engage  in  private  enterprises  will  not  be  implied 
from  a  general  grant  of  power  such  as  general  welfare  or 
home  rule  provisions  of  its  charter  or  statutes.^    No  implica- 

'  See  cases,  preceding  sections. 

2  Brooklyn  City  Ry.  Co.  v.  Whalen,  191  N.  Y.  App.  Div.  737,  229  N.  Y.  570, 
128  N.  E.  215;  Re  Municipal  Fuel  Plants,  182  Mass.  605,  66  N.  E.  25;  Opinion 
of  Justices,  155  Mass.  598,  30  N.  E.  1142;  Att'y  Gen.  v.  Detroit,  150  Mich. 
310,  113  N.  W.  1107. 

2  State  ex  rel.  Att'y  Gen.  v.  Toledo,  48  Ohio  St.  112,  26  N.  E.  1061,  11 L.  R.  A. 
729. 

*  State  ex  rel.  Toledo  v.  Lynch,  88  Ohio  St.  71,  102  N.  E.  670;  Brooklyn 
City  Ry.  Co.  v.  Whalen,  su-pra.    See  §  23-28  ante. 

52 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  30 

tion  can  be  drawn  of  a  grant  of  power  to  municipalities  to 
assume  those  activities  which  according  to  our  conception 
of  government  founded  on  the  principle  of  individuahsm 
is  left  to  the  enterprise  of  private  individuals, — a  system 
under  which  all  of  our  success  as  a  government  indus- 
trially, commercially  and  financially  has  been  accom- 
pHshed.^  They  may  not,  therefore,  erect  buildings  to  rent 
or  lease  them  or  engage  in  the  sale  of  commodities  unless 
expressly  thereunto  authorized  by  legislative  sanction  and 
then  only  when  the  purpose  is  public.^ 

§  30.  Power  to  Authorize  Municipal  Enterprise  Exists  in 
State  Legislature. 

By  the  great  weight  of  authority,  the  power  to  authorize 
the  municipahty  to  engage  in  the  business  of  supplying 
commodities  which  may  be  impressed  with  a  public  necessity 
and  constitute  a  public  use  clearly  exists  in  the  legislature, 
as  the  repository  of  the  sovereign  power  of  the  State,  but 
such  power  must  be  conferred  upon  municipalities  before 
the  latter  can  exercise  the  power,  and  until  so  authorized 
they  possess  no  implied  power  to  engage  in  business  in 
competition  with  private  persons  engaged  in  the  same 
business.^  These  authorities  differ  as  to  the  test  to  be 
apphed   in   determining   what   constitutes  a   pubhc   use.^ 

1  Laughlin  v.  Portland,  111  Me.  486,  90  Atl.  318;  Brooklyn  City  Ry.  Co.  v. 
Whalen,  supra. 

2  State  ex  rel  Att'y  Gen.  v.  Toledo,  48  Ohio  St.  112,  11  L.  R.  A.  729;  Heald 
V.  Cleveland,  19  Ohio  Nisi  Prius  n.  s.  305;  Sugar  v.  Monroe,  108  La.  677,  32 
So.  961;  Warden  v.  New  Bedford,  131  Mass.  23;  Kingman  v.  Brockton,  153 
Mass.  255,  26  N.  E.  998;  Bates  v.  Bassett,  60  Vt.  530,  15  Atl.  200. 

3  Brooklyn  City  R.  Co.  v.  Whalen,  191  App.  Div.  737,  229  N.  Y.  570,  128 
N.  E.  215;  Sugar  v.  Monroe,  108  La.  677,  32  So.  961;  Bates  v.  Bassett,  60  Vt. 
530,  15  Atl.  200;  Worden  v.  New  Bedford,  131  Mass.  23;  Milligan  v.  Miles 
City,  51  Mont.  374,  153  Pac.  276;  Atty.  Gen.  v.  Detroit,  150  Mich.  310,  113 
N.  W.  1107;  Hunnicutt  v.  Atlanta,  104  Ga.  1,  30  S.  E.  500;  Laughlin  v.  Port- 
land, 111  Me.  486,  90  Atl.  318. 

*  Laughlin  v.  Portland,  supra;  Re  Municipal  Fuel  Plants,  182  Mass.  605, 
66  N.  E.  25.    See  preceding  sections,  this  chapter. 

53 


§  30  ]  THE   POWER  TO    CONTRACT  [  PART  I 

"VMien  authorized  by  the  legislature  to  engage  in  these 
acti\'ities,  the  money  raised  by  municipalities  and  used  by 
them  in  conducting  the  enterprise  is  engaged  in  a  public 
puipose.^  When  money  is  appropriated  and  expended  by 
municipalities  in  the  exercise  of  these  business  powers  and 
functions,  the  fact  that  some  incidental  benefit  is  con- 
ferred upon  individuals  is  not  an  objection  to  the  exist- 
ence or  exercise  of  the  power  so  long  as  the  main  purpose 
of  the  expenditure  is  to  subserve  a  public  municipal 
purpose.-  If  the  primary  object  of  the  expenditure  is  to 
serve  some  private  end,  it  is  illegal  although  incidentally 
it  may  serve  some  public  purpose.  But  if  the  primary 
object  is  to  serve  some  public  municipal  purpose,  the 
expenditure  is  legal,  notwithstanding  it  also  involves  as  an 
incident  an  expense  which  standing  by  itself  would  be 
illegal.^  Thus  while  a  municipahty  might  not  erect  a 
building  to  rent  or  lease,  where  it  had  an  old  building 
useless  for  public  needs,  because  superseded  by  a  new  one, 
it  may  lawfully  and  in  the  exercise  of  prudence  and  a 
lawful  regard  not  to  sacrifice  its  property  expend  money 
upon  it  so  as  to  put  it  in  condition  for  rental  purposes.^ 
If  a  municipality  is  without  power  to  erect  a  steam  plant 
and  engage  in  the  sale  of  power,  its  action  in  expending 
money  for  such  a  purpose  would  be  illegal,  but  where  it 
has  authority  and  has  erected  a  steam  plant  which  pro- 
duces a  surplus  of  steam,  it  may  lawfully  sell  such  surplus 
power,  although  primarily  it  could  not  have  erected  a 
plant  for  such  a  purpose.^     While  a   municipality  may 

1  Laughlin  v.  Portland,  supra. 

2  Bates  V.  Bassett,  60  Vt.  530,  15  Atl.  200;  Daggett  v.  Colgan,  92  Cal.  53, 
28  Pac.  51;  Milligan  v.  Miles  City,  51  Mont.  374,  153  Pac.  276. 

'  Bates  V.  Bassett,  swpra. 
*  Bates  V.  Bassett,  supra. 
^  MiUigan  v.  Miles  City,  51  Mont.  374,  153  Pac.  276. 

54 


CHAP.  VIII  ]  PRIVATE    ENTERPRISE  [  §  30 

supply  and  sell  water  to  its  inhabitants  under  a  grant  of 
authority  to  erect  waterworks  or  provide  a  supply  of 
water,  it  may  not  enter  upon  the  business  of  selUng  the 
water  to  inhabitants  of  neighboring  municipalities,  as  this 
becomes  a  private  enterprise  in  which  the  public  may  not 
engage  without  express  authority  from  the  legislature.* 
For  the  same  reason,  municipalities  are  denied  the  power  to 
engage  in  the  business  of  selling  Hght  for  private  use  in  the 
absence  of  express  grant  of  power,  ^  but  this  power  should 
be  readily  inferred  from  general  powers.^  The  power  to 
engage  in  the  business  of  selling  ice  will  also  be  inferred 
from  the  grant  of  power  to  supply  pure  and  wholesome 
w^ater,  since  ice  is  merely  a  variant  form  of  water.  ^  But 
powers  thus  granted  are  not  unreasonably  extended.  A 
grant  of  authority  to  repair  streets  under  its  charter  will 
not  imply  a  power  to  operate  a  stone  quarry  outside  of  its 
corporate  limits.^  Exclusive  grant  of  power  to  one  person 
to  run  omnibuses  is  not  a  valid  exercise  of  a  power  to 
license,  tax  and  regulate  omnibuses.^  Nor  will  a  munic- 
ipality by  implication  from  a  general  grant  of  power  be 
deemed  authorized  to  make  a  contract  which  is  in  effect 
a  pledge  of  its  credit  to  support  a  private  enterprise.^ 

1  ChUds  V.  Columbia,  87  S.  C.  566,  70  S.  E.  296;  Farwell  v.  Seattle,  43  Wash. 
141,  86  Pac.  217;  RehiU  v.  Jersey  City,  71  N.  J.  L.  109,  58  Atl.  175. 

2  Baily  v.  PhUadelphia,  184  Pa.  St.  594,  39  Atl.  494;  Swanton  v.  Highgate, 
81  Vt.  152,  69  Atl.  667. 

3  Crawfordsville  v.  Braden,  130  Ind.  149,  28  N.  E.  849;  Keenan  v.  Trenton, 
130  Tenn.  71,  168  S.  W.  1053;  Andrews  v.  South  Haven,  187  Mich.  294,  153 
N.  W.  827. 

4  Holton  V.  CamiUa,  134  Ga.  560,  68  S.  E.  472. 

5  Donnable  v.  Harrisonburg,  104  Va.  533,  52  S.  E.  174. 
*  Logan  V.  Pyne,  43  Iowa,  524. 

7  Scott  V.  LaPorte,  162  Ind.  34,  68  N.  E.  278,  69  N.  E.  675;  Ottawa  w. 
Carey,  108  U.  S.  110,  27  L.  Ed.  669. 


55 


§  31  ]  THE  POWER  TO  CONTRACT         [  PART  I 

§  31.  Emergency    Which    Will    Authorize — Engaging    in 
Municipal  Enterprise  Without  Express  Authoriza- 
tion. 
The  inadequacy  of  the  street  raihvay  service  in  a  munic- 
ipality is  not  a  sufficient   justification   for  a  municipality 
to  assume  a  power  not  granted,  nor  does  such  inadequacy 
create  an  emergency  calling  for  such  immediate  action  as 
will  authorize  a  municipality  to  engage  in  the  business  of 
operating  stages  or  omnibuses,  or  empower  it  to  contract 
for  automobiles  for  that  purpose.     A  permanent  condition 
of   inadequacy   of   railroad    service   is   not  an   emergency 
which    will    justify    continued    operation   of    stage    lines. ^ 

§  32.  Power   to   Authorize   Municipalities   to   Engage   in 
Certain  Enterprises  Does  Not  Exist. 

The  legislature  has  been  denied  the  power  to  enact 
legislation  which  will  authorize  a  town  to  estabhsh  manu- 
factories and  operate  them  either  municipally  or  by  lease 
to  private  individuals  or  corporations, ^  and  in  Uke  manner 
it  has  been  denied  the  power  to  engage  in  commercial 
enterprise  such  as  buying  and  selling  of  coal  in  competition 
with  private  dealers,  as  such  use  of  money  is  not  for  a 
pubhc  purpose,^  unless  great  inadequacy  or  difficulty  of 
supply  exists.^  Where  authority  has  been  conferred  to 
supply  electricity  the  power  to  supply  lamps  and  fittings 
as  incidental  was  denied.^  The  power  to  engage  in  the 
mo\'ing  picture  business  was  denied  to  cities  under  the 

1  Brooklyn  City  R.  Co.  v.  Whalen,  191  N.  Y.  App.  Div.  737,  aff'd  229  N.  Y. 
570,  128  N.  E.  215. 

2  Opinion  of  Justices,  58  Me.  590. 

3  Baker  v.  Grand  Rapids,  142  Mich.  687, 106  N.  W.  208;  Opinion  of  Justices, 
155  Ma.ss.  601,  30  N.  E.  1142. 

*  Re  Municipal  Fuel  Plants,  182  Mass.  605,  66  N.  E.  25;  Contra,  Laughlin  v. 
Portland,  111  Me.  486,  90  Atl.  318.    But  see  §§  23-28,  ante. 

*  Atty.  Gen.  v.  Leicester,  80  L.  J.  Ch.  21. 

56 


CHAP.  VIII  ]  PRIVATE    ENTERPRISE  [  §  32 

home  rule  clause  of  the  Constitution  of  Ohio  because  such 
enterprise  did  not  come  within  the  powers  of  local  self- 
government.^ 

The  city  was  denied  the  implied  right  in  the  absence  of 
express  legislative  authority  to  engage  in  the  general 
plumbing  business  as  an  incident  to  its  authority  to 
operate  a  waterworks,  and  in  the  course  of  such  business  to 
sell  supplies  and  materials  to  private  citizens  and  dc 
contract  work  in  placing  and  installing  these  upon  their 
premises.^ 

Nor  does  a  statute  which  authorizes  the  holding  of  real 
estate  empower  a  municipahty  to  engage  in  the  business  of 
buying  and  selling  real  estate  or  dealing  generally  in  it  as 
principal  or  broker.^ 

A  general  power  to  hold,  purchase  and  convey  real 
estate,  and  to  make  regulations  for  health,  will  not  author- 
ize a  city  to  lease  land  for  use  of  picnic  parties  and  people 
generally.'*  In  the  absence  of  an  express  sanction  from  the 
legislature,  a  municipality  may  not  engage  in  the  manu- 
facture of  brick  for  paving  purposes.^  But  a  city  author- 
ized by  charter  to  grade  and  pave  streets  and  purchase 
and  hold  real  estate  necessary  or  convenient  for  its  use, 
has  been  declared  to  have  power  to  purchase  a  stone 
quarry  and  manufacture  crushed  stone.^  But  under  similar 
statutory  power,  the  right  to  operate  a  quarry  outside 
of  its  limits  was  declared  not  to  be  implied.^ 

1  State  ex  rel.  Toledo  v.  Lynch,  88  Ohio  St.  71,  102  N.  E.  670. 

2  Keen  v.  Waycross,  101  Ga.  588,  29  S.  E.  542. 

3  Hayward  v.  Red  Cliff,  20  Colo.  33,  36  Pac.  795;  Champaign  v.  Harmon, 
98  lU.  491. 

4  Bloomsburg  Land  Imp.  Co.  v.  Bloomsburg,  215  Pa.  452,  64  Atl.  602. 

5  Atty.-Gen.  v.  Detroit,  150  Mich.  310,  113  N.  W.  1107. 
8  Schneider  v.  Menasha,  118  Wis.  298,  95  N.  W.  94. 

7  Donable  v.  Harrisonbm-g,  104  Va.  533,  52  S.  E.  174;  Duncan  v.  Lynch- 
burg, 2  Va.  Dec.  700,  34  S.  E.  964,  48  L.  R.  A.  331. 

57 


§  33  ]  THE  POWER  TO  CONTRACT         [  PART  I 

§  33.  Sale  of  Fuel  by  Municipalities. 

In  ]\Iaine,  the  reason  advanced  to  sustain  the  legislation 
authorizing  the  municipality  to  engage  in  the  fuel  business, 
was  that  fuel  was  not  an  ordinary  article  of  merchandise 
for  which  there  are  substitutes,  but  an  indispensable 
necessity  of  life.  The  element  of  commercial  enterprise 
was  entirely  lacking.  The  act  did  not  contemplate  em- 
barking in  business  for  the  sake  of  direct  profits  since  the 
fuel  was  to  be  furnished  at  cost,  nor  for  the  sake  of  indirect 
gains  that  might  result  to  purchasers  through  reduction  in 
price  by  governmental  competition,  but  simply  to  enable 
the  citizens  to  be  supplied  with  something  which  was  a 
necessity  in  its  absolute  sense  to  the  enjoyment  of  hfe  and 
health  which  could  otherwise  be  obtained  with  great 
difficulty,  and  whose  absence  would  endanger  the  whole 
community.^ 

In  Massachusetts,  it  was  declared  that  the  legislature 
possesses  no  power  to  authorize  the  purchase  of  fuel  by 
municipaHties  for  resale  since  this  is  not  a  public  purpose 
for  which  public  money  could  be  expended,  and  they  may 
not  be  given  power  by  the  legislature  to  buy  and  sell  coal 
and  wood  in  competition  with  private  enterprise,  although 
such  fuel  was  scarce  and  high,  or  because  thereby,  the 
cost  to  their  inhabitants  could  be  reduced,  unless  there 
was  such  a  local  scarcity  as  created  widespread  distress 
which  could  not  be  taken  care  of  by  private  enterprise. 
Unless  the  last  described  circumstances  exist,  munic- 
ipaHties may  not  be  given  power  by  the  legislature  to 
engage  in  common  kinds  of  business  which  can  be  con- 
ducted successfully  by  individuals  without  the  use  of  any 
governmental  function,  and  to  engage  in  these  businesses 

1  Laughlin  v.  Portland,  111  Me.  486,  90  Atl.  318. 

58 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  34 

in  buying  and  selling,  in  competition  with  private  enter- 
prise.^ 

§  34.  Power  to  Authorize  Use  of  Public  Money  to  Erect 
Homes  for  Wage  Earners — To  Acquire  Surplus 
Land  in  Street  Widening  and  Use  Same  to  Pro- 
mote Manufacture. 

The  legislature  has  no  power  to  use  the  money  of  the 
public  or  money  deposited  in  the  State  treasury  as  un- 
claimed deposits  by  savings  banks  to  purchase  land  and 
develop  it  by  buildings  to  be  rented,  managed  and  sold 
by  it  for  the  purpose  of  providing  homes  for  mechanics, 
laborers  or  wage  earners  or  for  the  purpose  of  improving 
the  public  health  by  providing  homes  in  the  more  sparsely 
populated  areas  of  the  State  for  those  who  might  other- 
wise Uve  in  the  most  congested  areas  of  the  State. ^ 

It  cannot  authorize  a  municipahty  to  exercise  the  right 
of  eminent  domain  in  connection  with  the  laying  out  of  a 
pubUc  thoroughfare  by  taking  land  adjoining  but  outside 
the  proposed  thoroughfare  with  a  view  to  its  subsequent 
use  by  private  individuals  under  conveyance,  lease  or 
agreement,  although  such  use  may  be  intended  to  promote 
trade  and  manufacturing  by  the  erection  of  suitable 
buildings  on  the  land,  the  purpose  not  being  public  within 
the  constitution.^ 

The  Constitution  of  New  York  was  amended  to  permit, 
in  a  somewhat  parallel  situation,  the  acquiring  of  surplus 
lands  above  the  actual  needs  for  a  given  pubUc  purpose, 
its  object  being  to  prevent  excessive  awards  for  con- 
sequential damages   to   lands   remaining  after  a  taking.^ 

1  Opinion  of  Justices,  155  Mass.  598,  30  N.  E.  1142;  Re  Municipal  Fuel 
Plants,  182  Mass.  605,  66  N.  E.  25. 

2  Opinion  of  Justices,  211  Mass.  624,  98  N.  E.  611. 

3  Opinion  of  Justices,  204  Mass.  607,  91  N.  E.  405. 
*  New  York  Const.,  Art.  I,  sec.  7. 

59 


§  35  ]  THE  POWER  TO  CONTRACT         [  PART  I 

§  35.  Power  to  Engage  in  Certain  Enterprises  May  Be 
Conferred. 

A  municipality,  while  it  has  the  power  to  erect  an 
auditorium  hall  and  to  issue  bonds  therefor,  and  may  use 
such  auditorium  for  any  la^vful  purpose  and  derive  revenue 
therefrom,  has  no  authority  to  issue  bonds  to  be  used 
primarily  for  the  erection  of  a  building  for  exposition 
purposes.  Nor  may  it  use  portions  of  such  auditorium  for 
lodge  rooms,  concert  halls,  show  rooms  or  theaters  as 
purely  private  enterprise.^ 

The  theory  upon  which  the  erection  and  maintenance  of 
such  buildings  is  sustained  is  because  they  afford  a  means 
to  exercise  the  right  of  assemblage  which  is  an  inherent 
right  of  the  people  which  has  been  anciently  exercised. 
The  same  right  has  been  accorded  in  other  States,^  but  in 
one  State,  the  erection  was  sustained  as  being  a  public 
utihty.^  When  the  legislature  grants  power  to  municipalities 
to  sell  intoxicating  hquors  or  establish  dispensaries  for  the 
same,  this  is  a  vaUd  exercise  of  the  poUce  power,  the 
promotion  of  the  pubhc  good,  and  money  expended  is  for 
a  pubUc  purpose.^ 

§  36.  Usual  Powers  of  Municipalities  in  America. 

The  support  of  schools,  the  reUef  of  paupers,  the  main- 
tenance of  highways  are  pubhc  uses.  Legislation  has  been 
declared  valid  which  conferred  on  municipalities  the 
power  to  own  and  operate  railroads,  hghting  plants, 
power  and  heating  plants,  water  works  for  a  water  supply, 

1  Heald  v.  Cleveland,  19  Ohio  Nisi  Prius  n.  s.  305. 

2  Denver  v.  HaUett,  34  Colo.  393,  83  Pac.  1066;  Wheelock  v.  Lowell,  196 
Mass.  220,  81  N.  E.  977. 

'  State  ex  rel.  v.  Barnes,  22  Okla.  191,  97  Pac.  997. 

♦  Equit.  Loan  &  Security  Co.  v.  Edwardsville,  143  Ala.  182,  38  So.  1016; 
Farmville  v.  Walker,  101  Va.  323,  43  S.  E.  558;  Plumb  t;.  Christie,  103  Ga. 
686,  30  S.  E.  759. 

60 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  37 

public  grounds,  parks  and  recreation  centers.  They  may- 
hold  property  for  charitable  purposes,  estabUsh  municipal 
lodging  houses,  pubhc  baths  and  bath  houses,  pubhc 
libraries,  reading  rooms.  They  may  purchase  books  and 
may  even  maintain  and  regulate  pubHc  band  concerts. 
They  may  fill  and  improve  lands  for  terminal  faciUties, 
may  improve  harbors,  docks  and  terminals  and  may  erect 
and  carry  on  machine  shops,  repair  shops  and  garages, 
the  ownership  of  markets  and  the  ownership  and  operation 
of  ferries. 

In  England  in  addition  to  engaging  in  all  or  nearly  all 
of  the  foregoing  activities,  cities  and  other  municipalities 
have  assumed  as  legitimate  pubhc  enterprises  the  operation 
of  slaughter  houses,  cold  air  stores,  ice  plants,  buildings 
for  entertainment  and  music,  and  they  have  engaged  in 
the  sale  of  milk  and  the  manufacture  of  brick.  They  have 
built  and  rented  dwelhngs  to  laborers.  The  tendency  in 
both  countries  is  to  permit  a  wider  extension  of  powers 
and  the  engaging  by  cities  in  many  activities  heretofore 
considered  solely  within  the  province  of  private  enterprise.^ 
Indeed,  the  nation  itself  has  set  the  example  and  led  the 
way  both  in  England  and  America  by  establishing  a 
parcel  post  in  competition  with  the  express  companies 
and  is  using  all  post  routes  including  the  air  for  this 
purpose. 

§  37.  Aid  to  Private  Enterprise. 

Public  money  can  only  be  expended  for  public  purposes. 
The  giving  of  aid  to  manufacturing  and  other  private 
enterprises  to  induce  them  to  locate,  construct  and  operate 
their  estabhshments  within  the  confines  of  a  municipality, 
will  not  justify  it  in  raising  money  by  taxation.    Taxation 

1  See  DiUon,  Mun.  Corp.,  §  21. 

61 


§  37  ]  THE  POWER  TO  CONTRACT         [  PART  I 

to  pay  bonds  for  the  aid  and  support  of  private  enterprise 
is  not  taxation  for  a  public  object.  It  is  taxation  which 
takes  the  private  property  of  one  individual  for  the  private 
use  of  another.^ 

Stock  may  not  be  purchased  in  a  manufacturing  enter- 
prise, to  procure  or  keep  its  location  within  the  confines  of 
a  municipality.  While  it  tends  directly  to  benefit  every 
citizen  by  the  increase  of  general  business  activity,  the 
greater  facility  of  obtaining  employment,  the  consequent 
increase  in  population,  the  enhancement  in  the  value  of 
real  estate,  and  the  opportunities  for  its  sale  and  the 
multiplication  of  conveniences,  these  are  not  the  direct  and 
immediate  pubhc  uses  and  purposes  to  which  moneys 
raised  by  taxation  may  be  devoted,^  and  such  purchase 
contracts  are  therefore  void.  A  statute  which  authorized 
a  municipaUty,  therefore,  to  build  a  dam  for  the  purpose 
of  leasing  the  water  power  obtained  to  manufacturing 
industries  was  declared  void.^  While  the  contemplated 
improvement  of  the  water  power  on  certain  rivers  if 
judiciously  and  properly  carried  out,  might  build  up  a 
city  and  add  greatly  to  its  general  growth,  welfare  and 
prosperity,  just  as  would  the  establishment  of  any  kind  of 

1  People  V.  Westchester  Co.  Nat.  Bank,  231  N.  Y.  465,  132  N.  E.  241;  Loan 
Assn.  V.  Topeka,  20  Wall.  (U.  S.)  655,  22  L.  Ed.  455;  Parkersburg  v.  Brown, 
106  U.  S.  487,  501,  27  L.  Ed.  238;  Cole  v.  LaGrange,  113  U.  S.  1,  28  L.  Ed. 
896,  aff'g  19  Fed.  871;  Missouri  Pac.  Ry.  Co.  v.  Nebraska,  164  U.  S.  403,  41 
L.  Ed.  489;  State  v.  Osawkee  Tp.,  14  Kan.  418;  Central  Branch  Un.  Pac.  R. 
Co.  V.  Smith,  23  Kan.  745;  Coates  v.  Campbell,  37  Minn.  498,  35  N.  W.  366; 
Allen  V.  Jay,  60  Me.  124;  Deering  &  Co.  v.  Peterson,  75  Minn.  118,  77  N.  W. 
568;  Minn.  Sugar  Co.  v.  Iverson,  91  Minn.  30,  97  N.  W.  454;  Eufala  v.  McNab, 
67  Ala.  588;  Markley  v.  Mineral  City,  58  Ohio  St.  430;  Manning  v.  Devil's 
Lake,  13  N.  D.  47,  99  N.  W.  51;  Michigan  Sugar  Co.  v.  Auditor  Gen.,  124 
Mich.  674,  83  N.  W.  625;  Deal  v.  Mississippi  County,  107  Mo.  464,  18  S.  W. 
24;  Feldman  v.  Charleston,  23  S.  C.  57;  Sutherland  Innes  Co.  v.  Evart,  86 
Fed.  597;  Bissell  v.  Kankakee,  64  111.  249,  21  Am.  R.  554;  Low  v.  Marysville, 
5  Cal.  214. 

2  Weismer  v.  Douglas,  64  N.  Y.  91. 

» Atty.  Gen.  v.  Eau  Claire,  37  Wis.  400. 

62 


CHAP.  VIII  ]  PRIVATE    ENTERPRISE  [  §  37 

manufactures  which  employ  capital  and  labor,  yet  munic- 
ipalities have  no  power  to  impose  taxes  to  raise  money 
to  be  devoted  to  such  purposes.^  A  statute  which  pur- 
ported to  authorize  the  levy  of  a  tax  for  the  promotion 
of  the  establishment  and  erection  of  factories  to  manufac- 
ture sorghum  into  cane  sugar,  was  declared  invahd.^  In 
like  manner,  the  power  of  a  municipality  to  give  aid  to  a 
grist  mill  was  denied.^  So  the  attempt  at  aid  to  a  private 
cemetery  association  was  in  like  manner  held  without 
power.  "*  But  towns  and  cities  may  be  authorized  and 
empowered  to  aid  in  the  estabhshment  of  irrigation 
districts.^  They  may  also  be  authorized  to  subscribe  to  aid 
a  turnpike  company,^  or  to  purchase  bonds  in  aid  of  a 
plankroad  company  ^  or  one  operating  a  toll  bridge.^ 
The  improvement  of  harbors  where  the  object  is  to  pro- 
mote commerce  will  sustain  taxation  as  for  a  public 
purpose.  So  will  the  construction  of  docks,  wharves  and 
possibly  of  warehouses  to  be  used  under  governmental 
authority  as  part  of  the  facilities  for  the  transportation  of 
merchandise  in  conamercial  enterprises  and  the  building  of 
railroads  for  the  same  purpose  may  affect  the  public  so 
directly  as  to  constitute  a  public  purpose  for  which  money 
raised  by  taxation  may  be  expended.^ 
By  the  overwhelming  weight  of  authority,  the  power  of 


1  Mather  v.  Ottawa,  114  111.  659,  3  N.  E.  216;  Coates  v.  Campbell,  37  Minn. 
498. 

2  Dodge  V.  Mission  Tp.,  107  Fed.  827. 

3  Osborne  v.  Adams  County,  106  U.  S.  181,  27  L.  Ed.  129;  State  v.  Adams 
County,  15  Neb.  569,  20  N.  W.  96. 

*  Luques  v.  Dresden,  77  Me.  186. 

5  Fallbrook  Irrig.  Disfc.  v.  Bradley,  164  U.  S.  112,  41  L.  Ed.  369. 

« Comm.  V.  McWUliams,  11  Pa.  St.  61. 

7  Mitchell  V.  Burlington,  71  U.  S.  270,  18  L.  Ed.  350. 

8  Dodge  County  Commrs.  v.  Chandler,  96  U.  S.  205,  24  L.  Ed.  625. 

9  Moore  v.  Sanford,  151  Mass.  285,   24  N.  E.  323;  Opinion  of  Justices,  204 
Mass.  607,  91  N.  E.  405. 

63 


§  37  ]  THE  POWER  TO  CONTRACT         [  PART  I 

the  legislature,  unless  limited  by  the  Constitution,  to 
authorize  municipalities  to  subscribe  for  the  stock  of  rail- 
road corporations  or  make  gifts  to  them,  has  been  sustained 
on  the  ground  that  their  construction  is  for  a  public  pur- 
pose.^ But  in  the  absence  of  express  authority,  they  have 
no  power  to  subscribe  aid  to  a  railroad  or  other  private 
enterprise.- 

§  38.  Power  to  Engage  in  Ownership  and  Operation  of 
Railroads. 

Railroads  are  highways  constructed  on  rails,  affording 
means  of  rapid  communication  between  all  points  of  land 
for  the  transportation  of  men  and  animals  and  the  various 
products  and  necessities,  raw  and  manufactured,  of  industry 
and  commerce,  and  the  instrumentalities  by  which  these 
and  all  businesses  of  life  are  conducted.  They  are  regu- 
lated and  controlled  by  the  public  authorities,  National  and 
State,  for  the  general  welfare,  and  are  required  to  furnish 
impartial  accommodations  to  all  citizens  upon  uniform  rates 
estabhshed  by  law  to  that  end  from  time  to  time. 

They  are  considered  in  the  highest  sense  to  be  necessary 
instruments  of  commerce  and  indispensable  to  the  ne- 
cessities of  the  complex  civilization  under  which  we 
live. 

They,  therefore,  constitute  in  its  broadest  sense  a  public 
use  and  purpose  and  are  none  the  less  highways  because  a 
fare  is  charged  in  order  that  their  use  may  be  allowed. 

1  Gelpcke  v.  Dubuque,  68  U.  S.  175,  17  L.  Ed.  519;  Moultrie  v.  Fairfield, 
105  U.  S.  370,  26  L.  Ed.  945;  Otoe  County  v.  Baldwin,  111  U.  S.  1,  28  L.  Ed. 
331;  State  v.  Nemaha  County,  7  Kan.  542;  Gibbons  v.  Mobile,  etc.,  R.  Co.,  36 
Ala.  410;  Society  for  Savings  v.  New  London,  29  Conn.  174;  Butler  v.  Dunham, 
27  111.  474;  Cotten  v.  Leon  County,  6  Fla.  610;  People  v.  Mitchell,  35  N.  Y. 
551;  Comm.  ex  rel.  Armstrong  v.  Perkins,  43  Pa.  400;  Aurora  v.  West,  22  Ind» 
88. 

64 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  38 

Tolls  are  charged  on  turnpikes  and  plankroads,  the  ancient 
means  which  provided  a  way  of  transportation  which  pre- 
ceded the  modern  railroad  in  the  evolution  of  transporta- 
tion methods,  yet  these  were  always  considered  public 
highways.^  Railroads  in  Uke  manner  constitute  pubhc 
highways  and  are  a  public  use  for  which  pubhc  moneys 
raised  by  taxation  may  be  expended.^ 

A  public  use  is  one  the  purpose  of  which  must  be  neces- 
sary to  the  common  good  and  general  welfare  of  the  people 
of  the  pubhc  body,  sanctioned  by  its  citizens,  public  in 
character,  and  authorized  by  the  legislature.^  The  build- 
ing of  subways  for  the  carriage  of  such  passengers  as  pay 
the  regular  fare  is,  therefore,  for  a  public  use,  and  the 
legislature  has  power  to  order  or  sanction  taxation  for 
these  and  it  may  provide  for  their  construction  at  the 
expense  of  the  city  through  other  agents  than  those  regu- 
larly appointed  by  the  municipahty.^  When  municipalities 
engage  in  the  ownership  and  operation  of  these  railroads, 
they  are  not  exercising  governmental  functions  but  merely 
their  private  business  powers.^  Since  it  is  purely  a  business 
enterprise,  it  must  be  justified  if  at  all  under  the  pro- 
prietary powers  of  the  State  or  poHtical  subdivision,  and 
where  constitutional  provisions  indicate  a  clear  purpose 
that  the  counties  or  other  political  subdivisions  should 
never  go  into  the  business  of  railroad  building  and  forbid 
donation  or  ownership  in  part,  such  pohtical  organization 

1  Sun  Print.  &  Pub.  Assn.  v.  Mayor  of  New  York,  152  N.  Y.  257,  46  N.  E. 
499;  New  York  v.  Brooklyn  City  R.  R.  Co.,  232  N.  Y.  463. 

2  Idem.  Prince  v.  Crocker,  166  Mass.  347,  44  N.  E.  446;  Piatt  v.  San  Fran- 
cisco, 158  Cal.  74,  110  Pac.  304. 

3  Sun  Print.  &  Pub.  Ass'n  v.  Mayor,  supra. 

*  Prince  v.  Crocker,  supra;  Sun  Print.  &  Pub.  Ass'n  v.  Mayor,  supra;  Matter 
of  McAneny,  232  N.  Y.  377. 

6  Matter  of  Board  of  Rapid  Transit  Commrs.,  197  N.  Y.  81,  90  N.  E.  456, 
91  N.  E.  1110,  36  L.  R.  A.  n.  s.  647;  Atkinson  v.  Board  of  Commrs.,  18  Idaho, 
282,  108  Pan.  1046;  New  York  v.  Brooklyn  City  R.  R.  Co.,  232  N.  Y.  463. 

65 


§  38  ]  THE    POWER   TO    CONTRACT  [  PART  I 

will  not  be  allowed  to  do  by  indirection  what  was  directly 
prohibited.^ 

Statutes  which  authorize  cities  to  engage  in  such  enter- 
prise are  not  invalid  because  they  impose  a  heavy  debt 
upon  the  cities  and  to  an  extent  deprive  them  of  the  con- 
trol of  their  streets,  as  the  legislature  may  impose  these 
burdens  and  duties  upon  municipal  subdivisions  of  the 
State  without  their  consent.  Their  powers  conferred  by 
the  legislature  are  in  no  sense  a  contract  and  do  not  be- 
come vested  rights  as  against  the  legislature.^ 

§  39.  Private   Enterprise — Erection   of   Halls   for   Public 
Assembly — What  Private  Uses  Permitted. 

Municipalities  possess  the  power  to  expend  money  for 
the  purpose  of  erecting  public  meeting  halls  where  citizens 
may  exercise  their  ancient  right  of  assemblage  and  discus- 
sion of  public  questions.^  These  purposes  are  considered 
public  upon  the  same  footing  as  the  erection  of  a  city  or 
town  hall.  But  municipalities  have  not  the  power  to 
expend  public  money  in  the  erection  or  maintenance  of 
buildings  which  contain  public  halls  used  principally  or 
mainly  for  lodge  meetings,  concerts,  lectures,  dances  and 
theatrical  exhibitions,  to  the  members  or  promoters  of 
which  it  is  let  out  for  profit,^  and  this  is  so  even  though 
the  building  incidentally  housed  the  fire  department  and 
town  officers.^     Accordingly  it  was  declared  that  munici- 

1  Atkinson  v.  Bd.  of  Commrs.,  supra;  Pleasant  Tp.  v.  JEtna  Life  Ins.  Co.,  138 
U.  S.  67,  34  L.  Ed.  864;  Underground  R.  Co.  v.  New  York,  116  Fed.  952;  Walker 
V.  Cincinat.ti,  21  Ohio  St.  14;  Taylor  v.  Ross  County,  23  Ohio  St.  22;  Cin- 
cinnati V.  Dexter,  55  Ohio  St.  93,  44  N.  E.  520. 

^  Prince  v.  Crocker,  supra;  Matter  of  McAneny,  supra. 

"Wheelock  v.  Lowell,  196  Mass.  220,  81  N.  E.  977;  Denver  v.  Hallett,  34 
Colo.  393,  83  Pac.  1066. 

*  Wheelock  v.  Lowell,  supra;  Sugar  v.  Monroe,  108  La.  677,  32  So.  961; 
Brooks  V.  Brooklyn,  146  Iowa,  136,  124  N.  W.  868. 

^  Brooks  V.  Brooklyn,  supra. 

66 


CHAP.  VIII  ]  PRIVATE   ENTERPRISE  [  §  40 

palities  may  not  engage  in  the  business  of  running  a 
theater  in  one  of  the  school  buildings  belonging  to  it,  the 
reasons  assigned  being  that  they  possess  no  implied  power 
to  engage  in  business  in  competition  with  private  persons 
engaged  in  the  same  business,  and  further  that  they  can- 
not erect  buildings  for  speculative  or  business  purposes.^ 
While  such  buildings  when  lawfully  erected  for  a  public 
purpose  may  be  used  casually  and  incidentally  to  serve  a 
private  purpose,  either  gratuitously  or  for  compensation, 
nevertheless  they  cannot  use  such  buildings  in  a  manner 
which  is  inconsistent  with  or  prejudicial  to  the  main  pur- 
pose for  which  they  were  erected.^ 

§40.  Private  Enterprise — Erection  of  Public  Buildings — 
Renting  of  Same. 
Where  a  city  has  a  pubhc  building  already  erected  which 
is  larger  than  its  present  needs  for  municipal  purposes,  it 
may  allow  portions  of  such  buildings  to  be  used  for  private 
purposes  for  the  time  being,  either  for  a  stipulated  rent  or 
gratuitously.^  In  erecting  a  pubhc  building,  it  may  also 
make  reasonable  provision  for  probable  future  wants  and 
need  not  hmit  the  size  of  it  to  actual  existing  needs.* 
But  municipalities  possess  no  imphed  power  to  expend 
pubhc  money  in  acquiring  land  or  in  improving  lands  they 
own  in  order  to  rent  for  income^    The  power  of  taxation 

1  Sugar  V.  Monroe,  108  La.  677,  32  So.  961. 

2  Sugar  V.  Monroe,  supra. 

3  Worden  v.  New  Bedford,  131  Mass.  23;  Wheelock  v.  Lowell,  196  Mass. 
220,  81  N.  E.  977;  Sugar  v.  Monroe,  108  La.  677,  32  So.  961;  Biddleford  v. 
Yates,  104  Me.  506,  72  Atl.  335;  Gottlieb  K.  Co.  v.  Macklin,  109  Md.  429, 
71  Atl.  949;  Palmer  v.  Albuquerque,  19  N.  M.  285,  142  Pac.  929;  Jones  v. 
Camden,  44  S.  C.  319,  23  S.  E.  141;  Bates  v.  Bassett,  60  Vt.  530,  15  Atl.  200. 

4  Kingman  v.  Brockton,  153  Mass.  255,  26  N.  E.  998. 

5  Brooks  V.  Brooklyn,  146  Iowa,  136,  124  N.  W.  868;  Sugar  v.  Monroe, 
supra;  Wheelock  v.  Lowell,  supra;  Bates  v.  Bassett,  supra;  White  v.  Stamford, 
37  Conn.  586. 

67 


§  40  ]  THE  POWER  TO  CONTRACT         [  PART  I 

may  only  be  used  to  raise  money  for  public  uses  and  pur- 
poses and  this  is  not  such  a  purpose  until  expressly  so  de- 
clared by  the  legislature  itself.^  A  municipality  may  not, 
therefore,  divert  from  public  to  private  use  space  in  such 
buildings  actually  needed  by  the  public  and  so  in  use.^ 

Obedient  to  these  general  principles,  the  right  of  a  city 
to  erect  a  memorial  hall  to  be  used  and  maintained  as  a 
memorial  to  soldiers  and  sailors  is  conceded,  but  the 
authority  to  turn  such  building  over  to  a  post  of  the 
Grand  Army  has  been  denied  as  such  a  purpose  is  not  pub- 
lic and  pubUc  money  may  not  be  contracted  away  for  such 
a  purpose.^  In  like  manner  and  in  accord  with  the  same 
principle  as  appUes  to  public  buildings,  the  right  to  lease  a 
portion  of  the  public  streets  to  street  vendors  for  market 
use  has  been  denied.^  Where  a  town  has  on  its  hands  an 
old  building  formerly  used  for  municipal  purposes,  it  may 
lawfully  expend  money  in  repairing  it  to  put  it  in  condition 
for  renting  it.  While  it  could  not  expend  the  money 
primarily  as  an  investment  in  a  building  to  rent  it,  it  may 
nevertheless  prudently  and  properly  expend  it  for  the 
purpose  cited. ^  Parks  are  pleasure  grounds  set  apart  for 
the  recreation  of  the  public  to  promote  its  health  and  en- 
joyment. The  ground  may  be  used  for  public  Ubraries, 
zoological  gardens  and  restaurants.^  A  State  capitol  may 
be  erected  therein.'^  But  the  buildings  in  a  park  may  not 
be  leased  for  any  purpose  which  departs  from  these  objects 
without  legislative  authority.^ 

'  Kingman  v.  Brockton,  supra. 

2  Chapman  v.  Lincoln,  84  Neb.  534,  121  N.  W.  596. 

3  Kingman  v.  Brockton,  153  Mass.  255,  26  N.  E.  998. 

4  Schopp  V.  St.  Louis,  117  Mo.  131,  22  S.  W.  898,  20  L.  R.  A.  783. 
6  Bates  V.  Bassett,  60  Vt.  530,  15  Atl.  200. 

«  Williams  v.  GaUatin,  229  N.  Y.  248,  128  N.  E.  121. 
'  Hartford  v.  Maslen,  76  Conn.  599,  57  Atl.  740. 
8  Williams  v.  Gallatin,  supra. 

68 


CHAPTER  IX 

LOANS  OR  GIFTS  OF  MONEY  OR  CREDIT 

§  41.  Loan  or  Gift  of  Money  to  Individual. 

The  power  in  municipalities  to  borrow  money  and  issue 
bonds  therefor  implies  power  to  levy  a  tax  for  payment  of 
the  obhgation  incurred.  But  this  power  contained  in  the 
charter  or  statute  to  borrow  money  will  not  authorize  an 
issue  of  bonds  unless  they  are  issued  for  a  corporate  or 
public  purpose  where  it  is  provided  as  it  is  under  the 
Constitutions  of  most  of  the  States  of  the  Union  that  the 
power  of  taxation  may  not  be  used  by  municipaUties  ex- 
cept for  corporate  or  pubHc  purposes.^  They,  therefore, 
have  no  power  to  raise  money  by  public  taxation  to  be 
donated  to  persons  or  corporations  as  a  bonus  for  develop- 
ing the  water  power  within  its  limits  or  in  its  vicinity  for 
manufacturing  purposes.^  In  like  manner,  they  have  no 
power  to  loan  to  the  owners  of  land  whose  buildings  were 
burned  in  a  great  fire  funds  with  which  they  may  erect 
new  buildings,  as  such  a  use  of  the  public  moneys  is  not  for 
a  public  purpose.^  Nor  may  they  give  or  loan  money  to 
provide  destitute  farmers  with  seed  grain  and  grain  to  feed 
their  stock  while  putting  in  crops,  and  such  a  use  may  not 
even  be  authorized  by  statute  since  it  is  not  a  public  use.^ 

§  42.  Payment  of  Moral  Obligation. 

If  a  State,  in  carrying  out  a  policy  of  justice  appropriates 

1  Ottawa  V.  Carey,  108  U.  S.  110,  27  L.  Ed.  669. 

2  Idem;  Peo.  v.  Westchester  Co.  Nat.  Bk.,  231  N.  Y.  465,  132  N.  E.  241. 
» Lowell  V.  Boston,  111  Mass.  454,  15  Am.  R.  39. 

*  State  V.  Osawkee  Tp.,  14  Kan.  418,  19  Am.  R.  99. 

69 


§  42  ]  THE  POWER  TO  CONTRACT         [  PART  I 

money  to  pay  a  debt  or  to  make  a  contract  to  repair  an 
injur}''  inflicted  upon  an  individual  or  a  locality,  obliga- 
tory upon  it  in  honor  and  justice,  this  is  but  part  of  its 
legitimate  functions  and  duties  as  sovereign  and  the  pur- 
poses are  public.^  Where  a  State  diverts  waters  of  a  river 
into  a  canal  to  the  injury  of  riparian  owners  and  later  it 
endeavors  to  restore  by  making  improvements  in  the  river 
bed,  under  a  contract,  a  portion  of  the  water  thus  diverted 
to  the  use  of  such  owners  who  had  been  deprived  of  it  by 
the  act  and  authority  of  the  State,  such  an  expenditure  and 
the  contract  made  pursuant  to  it  are  for  a  public  purpose. ^ 
The  satisfaction  of  a  moral  obHgation  by  appropriating 
money  for  exempt  firemen  is  using  the  money  for  a  pubhc 
purpose  and  is  valid. ^  The  legislature  of  course  has  full 
authority  to  empower  a  municipaUty  to  pay  additional 
compensation  to  a  contractor  with  the  municipality  even 
though  no  such  power  existed  under  its  charter.'*  A  munic- 
ipality may  also  indemnify  its  officers  for  personal  liability 
incurred  in  the  discharge  of  their  official  duties  even  though 
they  exceed  their  authority.^ 

Claims  supported  by  a  moral  obhgation  and  founded  in 
justice,  where  the  power  exists  to  create  them  but  is 
defectively  exercised,  may  be  legalized  by  the  legislature 
and  enforced  against  the  State  or  any  of  its  poUtical  sub- 
divisions. So  it  may  authorize  a  contractor  to  sue  in  such 
a  case,   for  the  fair  and  reasonable  value  of  his  work.^ 


1  Waterloo  Woolen  Mfg.  Co.  v.  Shanahan,  128  N.  Y.  345,  28  N.  E.  358; 
Davis  V.  Comm.,  164  Mass.  241,  41  N.  E.  292. 

2  Waterloo  Woolen  Mfg.  Co.  v.  Shanahan,  supra. 

3  Tru.stees  of  Exempt  F.  Ben.  Fund  v.  Roome,  93  N.  Y.  313. 
*  Brewster  v.  Syracuse,  19  N.  Y.  116. 

6  Bancroft  v.  Lynnfield,  18  Pick.  566;  Fuller  v.  Groton,  11  Gray,  340;  Pike 
i;.  Middleton,  12  N.  H.  278;  Sherman  v.  Carr,  8  R.  I.  431;  Briggs  v.  Whipple, 
6  Vt.  95. 

« Wrought  Iron  Bridge  Co.  v.  Attica,  119  N.  Y.  204,  23  N.  E.  542. 

70 


CHAP.  IX  ]      LOANS   OR   GIFTS   OF   MONEY   OR   CREDIT         [  §  42 

The  legislature  does  not  exceed  its  constitutional  authority 
when  it  compels  a  municipality  to  pay  a  debt  which  has 
merit  in  it,  even  though  a  statute  of  limitations  has  run 
against  it,  or  to  pay  back  money  expended  for  services  per- 
formed for  the  benefit  of  a  city  without  lawful  authority.^ 

There  is  no  good  reason  why  the  State  should  be  power- 
less to  do  justice,  or  to  recognize  obUgations  which  are 
meritorious  and  to  provide  tribunals  to  pass  on  them.^ 
The  legislature  hkewise  has  power  to  require  a  municipal- 
ity to  audit  and  pay  debts  which  have  not  a  sufficient  legal 
basis  to  enforce  payment  in  a  court  of  law,  as  long  as  the 
claim  is  just  and  equitable  and  of  a  meritorious  nature  and 
it  matters  not  that  it  is  not  even  cognizable  in  equity.^ 

But  where  the  municipality  never  had  a  legal  or  moral 
obhgation  to  pay,  payment  cannot  be  compelled  by  the 
legislature,''  unless  there  is  a  pubhc  purpose  in  some  way 
involved  in  the  case.^  Such  a  purpose  does  not  inhere  in 
a  claim  for  expenses  incurred  by  a  pubhc  officer  in  defend- 
ing himself  against  charges  of  official  misconduct.^  And 
it  may  not  enforce  payment  of  a  gratuity  or  a  charity  by 
municipalities.^     In  this  connection,  it  is  to  be  noted  that 

1  Brewster  v.  Syracuse,  19  N.  Y.  116;  Brown  v.  New  York,  63  N.  Y.  239; 
New  Orleans  v.  Clark,  95  U.  S.  644;  New  York  v.  Tenth  Nat.  Bk.,  Ill  N.  Y. 
446,  18  N.  E.  618;  Friend  v.  Gilbert,  108  Mass.  408;  State  v.  Seattle,  60  Wash. 
24l',  110  Pac.  1008. 

2  Cole  V.  State,  102  N.  Y.  48,  6  N.  E.  277;  O'Hara  v.  State,  112  N.  Y.  146, 
19  N.  E.  659;  Cayuga  County  v.  State,  153  N.  Y.  279,  47  N.  E.  288;  Lehigh 
V.  R.  R.  V.  Canal  Bd.,  204  N.  Y.  471,  97  N.  E.  964;  Munro  v.  State,  223  N.  Y. 
208,  119  N.  E.  444.  See  Peo.  v.  Westchester  Co.  Nat.  Bk.,  231  N.  Y.  465, 
132'n.  E.  241. 

3  Wrought  Iron  Bridge  Co.  v.  Attica,  supra;  Gaynor  v.  Portchester,  230  N.  Y. 
210, 129  N.  E.  657;  People  exrel.  Dady  v.  Prendergast,  203  N.  Y.  1,  96  N.  E.  103. 

4  Chapman  v.  New  York,  168  N.  Y.  80,  61  N.  E.  108;  Bush  v.  Bd.  of  Super- 
visors, 159  N.  Y.  212,  53  N.  E.  1121;  People  ex  rel.  Waddy  v.  Partridge,  172 
N.  Y.  305,  65  N.  E.  164;  Gordon  v.  State,  233  N.  Y.  1. 

5  Stemmler  v.  New  York,  179  N.  Y.  473,  72  N.  E.  581;  Sun  Print.  &  Pub. 
Assn.  V.  Mayor,  152  N.  Y.  257,  46  N.  E.  499. 

8  Chapman  v.  New  York,  supra. 

7  In  re  Greene,  166  N.  Y.  485,  60  N.  E.  183. 

71 


§  42  ]  THE  POWER  TO  CONTRACT         [  PART  I 

in  some  jurisdictions  a  claim  which  is  merely  a  moral 
obligation  is  declared  to  be  a  gratuity,^  and  as  such  can- 
not be  enforced. 

§  43.  Power  to  Indemnify  Public  Officials. 

INIunicipalities  have  implied  power  to  indemnify  their 
officials  against  any  loss  or  liabilities  which  they  may  incur 
in  a  bona  fide  performance  of  their  duties,  even  though 
they  exceed  their  legal  rights  and  authority.-  It  is  one  of 
the  ordinary  expenses  of  a  municipality  to  protect  and  so 
reimburse  its  officer  who  in  good  faith  has  exercised  the 
functions  and  duties  of  his  office,  and  has  incurred  a  liability 
thereby.  The  reason  for  the  rule  is  to  be  found  in  the  fact 
that  it  is  in  the  interest  of  good  government  and  the  pro- 
motion of  the  public  welfare  that  the  power  to  indemnify 
and  protect  be  exercised,  for  if  it  were  not,  it  would  make 
officials  timid  and  overcautious  in  the  discharge  of  their 
duties,  especially  in  the  enforcement  and  maintenance  of 
law  and  order,  and  great  harm  would  consequently  result 
to  the  public  servdce.  The  power  to  indemnify  reposed  in 
the  general  governing  bodies  of  our  municipalities  in  this 
regard  is  a  discretionary  one  to  be  exercised  or  withheld  by 
them  as  they  see  fit.  Where  the  conduct  of  an  official  is 
meritorious  and  grounded  in  good  faith,  even  though  it 
prove  wrongful  because  authority  was  exceeded,  they  may 
indemnify,  and  on  the  other  hand,  where  officials  act  in  bad 
faith  and  imprudently  and  are  compelled  to  pay  damages, 

1  Conlin  v.  San  Francisco,  99  Cal.  17,  33  Pac.  753,  21  L.  R.  A.  474,  114  Cal. 
404,  46  Pac.  279,  33  L.  R.  A.  752. 

2  Shermann  v.  Carr,  8  R.  I.  431;  Cullen  v.  Carthage,  103  Ind.  196,  2  N.  E. 
671,  53  Am.  R.  504;  State  ex  rel.  Crowe  v.  St.  Louis,  174  Mo.  125,  73  S.  W.  623; 
Moorhead  v.  Murphy,  94  Minn.  123,  102  N.  W.  219;  Pike  v.  Middleton,  12 
N.  H.  278;  State,  Bradley  v.  Hammonton,  38  N.  J.  L.  430,  20  Am.  R.  404; 
FuUer  v.  Groton,  11  Gray,  340;  Bancroft  v.  Lynnfield,  18  Pick.  566,  29  Am.  D. 
623;  Gregory  v.  Bridgeport,  41  Conn.  76,  19  Am.  R.  485. 

72 


CHAP.  IX  ]     LOANS   OR   GIFTS   OF   MONEY   OR   CREDIT  [  §  43 

such  payment  can  be  made  suitable  personal  punishment 
to  them  by  withholding  the  power  of  reimbursement, 
because  the  acts  of  the  officers  were  not  in  the  public 
interest  and  such  conduct  ought  not  be  encouraged.^ 

But,  where  a  town  collector  illegally  permitted  a  party 
liable  to  taxation  to  give  his  note  instead  of  money  for 
taxes  which  was  received  and  accounted  for  as  money, 
and  such  note  was  paid  by  the  collector  because  the  maker 
failed  to  pay  the  town,  this  may  not  be  the  subject  of 
indemnity.  The  vote  of  a  friendly  majority  even  at  a 
town  meeting  will  not  permit  the  bestowal  of  pubhc  money 
upon  a  dehquent  officer  or  the  diversion  of  pubhc  money 
raised  by  taxation  to  satisfy  such  a  purpose.  The  public 
can  only  be  taxed  for  lawful  pubhc  purposes,  of  which  this 
is  not  one,  since  it  is  not  connected  with  the  exercise  by 
the  town  of  its  legal  powers.^  And,  where  municipahties 
are  restrained  by  constitutional  provision  from  making  a 
gift  of  money  to  an  individual  and  from  incurring  indebted- 
ness for  other  than  municipal  purposes,  it  may  not  be  com- 
pelled to  pay  a  claim  arising  under  a  statute  which  au- 
thorizes the  issue  of  revenue  bonds  to  be  paid  by  taxation 
to  reimburse  a  city  or  county  officer  in  the  amount  of  his  ex- 
penses incurred  in  defending  himself  against  charges  of  official 
misconduct.^  The  usual  cases  calling  for  reimbursement  are 
those  of  police  officers  sued  for  false  imprisonment  or  other 
torts  committed  in  the  performance  of  duty,  and  in  such  cases 
indemnification  is  proper  and  usual. ^    So,  village  trustees 

iShermann  v.  Carr,  8  R.  I.  431;  CuUen  v.  Carthage,  103  Ind.  196,  2  N.  E. 
571,  53  Am.  R.  504;  Moorhead  v.  Murphy,  94  Minn.  123,  102  N.  W.  219. 

2  Thorndike  v.  Camden,  82  Me.  39,  19  Atl.  95. 

3  Chapman  v.  New  York,  168  N.  Y.  80,  61  N.  E.  108.  (See,  on  the  power  of 
the  State  to  make  a  gift  where  restrained  by  constitutional  Hmitation, — People 
V.  Westchester  County  Nat.  Bank,  231  N.  Y.  465,  132  N.  E.  241.) 

^  State  ex  rel.  Crowe  v.  St.  Louis,  174  Mo.  125,  73  S.  W.  623;  Cullen  v.  Car- 
thage, supra;  Moorhead  v.  Murphy,  supra. 

73 


§  43  ]  THE    POWER   TO    CONTRACT  [  PART  I 

will  be  protected  against  acts  done  in  discharge  of  their 
official  duties/  or  where  a  public  officer's  official  report 
results  in  libel.-  An  Indian  freight  agent  will  be  reim- 
bursed for  freight  paid  by  him  on  supplies  in  a  sudden 
emergency.^ 

§  44.  Power  to  Indemnify  Where  No  Public  Rights  are 
Concerned. 

A  municipahty  has  no  power  to  indemnify  one  against 
his  act  which  may  cause  resulting  damage  to  others  unless 
public  rights  are  concerned."*  And  where  a  city  contracts 
to  buy  land  for  the  purpose  of  widening  a  street  it  cannot 
assume  the  responsibility  of  moving  back  the  building  for 
the  owner  and  restoring  it  nor  indemnify  him  for  risks 
which  may  arise  during  its  removal,  as  municipalities  can- 
not indemnify  risks  for  individuals  or  others/  and  they 
have  no  power  to  acquire  property  for  public  use  by  mak- 
ing contracts  of  this  character.^ 

§  45.  Loan  of  Credit. 

Usually  by  constitutional  provision  the  power  to  loan 
its  credit  or  aid  individuals  by  gift  is  denied  to  municipal 
political  organizations  of  the  State/  although  some  Con- 
stitutions permit  the  legislature  to  authorize  such  loans  of 

1  PoweU  V.  Newburgh,  19  Johns.  284. 

2  Fuller  V.  Groton,  11  Grav,  340. 

3  U.  S.  V.  Stow,  19  Fed.  807. 

4  American  Malleables  Co.  v.  Bloomfield,  82  N.  J.  L.  79,  81  Atl.  500,  aff'd  83 
N.  J.  L.  728,  85  Atl.  167;  Wheeler  v.  Sault  Ste.  Marie,  164  Mich.  338,  129 
N.  W.  685,  35  L.  R.  A.  n.  s.  547. 

5  Nashville  v.  Sutherland,  92  Tenn.  335,  21  S.  W.  674;  Wheeler  v.  Sault  Ste. 
Marie,  supra;  Carter  v.  Dubuque,  35  Iowa,  416. 

aPenley  v.  Auburn,  85  Me.  278,  27  Atl.  158;  Stewart  v.  Council  Bluffs,  50 
Iowa,  668;  Wheeler  v.  Sault  Ste.  Marie,  supra. 

7  Chapman  v.  New  York,  168  N.  Y.  80,  61  N.  E.  108.  (Q.  V.  for  history  of 
gift  litigation  and  occasion  for  constitutional  prohibition.)  Coleman  v.  Broad 
River  Tp.,  50  S.  C.  321,  27  S.  E.  774;  Sutherland  Innes  Co.  v.  Evart,  86  Fed. 
597. 

74 


CHAP.  IX  ]      LOANS   OR   GIFTS   OF   MONEY   OR   CREDIT  [  §  45 

credit.^  But  a  loan  of  credit  is  not  affected  by  sharing  one- 
half  of  the  expense  of  abolishing  grade  crossings  with  a 
railroad  company  even  though  the  agreement  effecting  this 
result  takes  the  form  of  a  promise  by  the  city  to  assume 
the  entire  cost  of  elevating  the  tracks  on  the  reciprocal 
promise  of  the  railroad  company  to  pay  back  its  one-half 
to  the  city.-  Nor  is  it  a  loan  of  credit  to  share  part  of  the 
cost,  even  though  the  municipality  could  require  the  rail- 
road company  to  build  a  viaduct  at  its  own  expense.  This 
right  will  not  prevent  the  municipality  from  sharing  the 
expense  where  it  is  deemed  to  be  just,  a  question  the  deci- 
sion of  which  rests  with  the  legislative  authority  of  the 
city.^  So  it  has  been  declared  that  the  indorsement  of  the 
agreement  as  to  payment  of  rent  on  bonds  issued  by  a 
water  company  supplying  the  city  with  water  under  a  con- 
tract is  not  a  loan  of  credit.  "^  Congress  has  enacted  against 
the  loaning  of  national  credit  on  pubUc  contracts  through 
advance  payments  to  a  contractor  performing  public  work 
by  providing  that  no  payments  may  be  made  in  excess  of 
the  value  of  services  already  rendered  or  of  articles  or 
supphes  delivered  in  part  performance  of  the  contract.^ 
The  legislatures  of  many  of  the  States  are  under  constitu- 
tional restrictions  in  this  respect  and  may  not  loan  the 
credit  of  the  State.  A  contract  to  advance  money  through 
interest-bearing  warrants  which  the  contractor  could  use  to 
raise  money  to  aid  him  in  carrying  on  his  work  is  invalid, 
even  though  the  contractor  agreed  to  repay  the  interest  on 
the  final  adjustment.^    A  municipality  may  lawfully  make 

1  Neale  v.  Wood  County,  43  W.  Va.  90,  27  S.  E.  370. 

2  Brooke  v.  PhUadelphia,  162  Pa.  St.  123,  29  Atl.  387. 

» Argentine  v.  Atchison,  T.  &  S.  F.  R.  Co.,  55  Kan.  730,  41  Pac.  946. 
4  Brady  v.  Bayonne,  57  N.  J.  L.  379,  30  Atl.  968;  State  v.  Great  FaUs,  19 
Mont.  518,  49  Pac.  15. 

6  U.  S.  Comp.  Stat.,  §  6647  (R.  S.,  §  3648) ;  Fowler  v.  U.  S.,  3  Ct.  CI.  43. 
«  Moran  v.  Thompson,  20  Wash.  525,  56  Pac.  29. 

75 


§  45  ]  THE  POWER  TO  CONTRACT         [  PART  I 

and  deliver  its  notes  in  payment  of  assessments  due  in  a 
mutual  insurance  company  in  which  it  has  membership  and 
such  constitutes  neither  a  loan  of  its  credit,  a  guaranty 
nor  a  gratuity.^ 

Bonds  issued  for  local  improvements  and  which  are  pay- 
able out  of  assessments  are  not  a  loan  of  credit.^  The 
power  to  borrow  money  for  a  public  purpose,  will  not  be 
made  the  basis  of  or  authorize  a  loan  of  credit.^  Nor  may 
a  municipality  imply  the  power  from  a  general  grant  of 
authority  to  make  a  contract  which  is  in  effect  a  pledge  of 
its  credit  to  support  a  private  enterprise.*  An  issue  of 
bonds,  however,  made  for  the  purpose  of  paying  a  vahd 
stock  subscription  is  not  a  loan  of  credit.^  In  some  States 
the  Constitution  prohibits  the  gift  or  loan  of  the  credit  of 
the  State  to  or  in  aid  of  any  individual.  Such  limitation 
not  only  prevents  the  use  of  the  credit  of  the  State  in 
supporting  or  fostering  the  growth  of  private  enterprise  or 
business,  but  makes  a  State  powerless  to  issue  its  bonds 
to  pay  a  bonus  to  residents  who  served  the  Nation  in  the 
World  War.  6 

§  46.  The  Same :  Acting  as  Surety. 

Since  municipaUties  may  not  loan  their  credit  without 
express  legislative  authority,  they  may  not  by  any  implied 
authority  from  a  general  grant,  act  as  a  guarantor.^ 
Accordingly,  these  public  bodies  cannot  guarantee  the 
pajnnent  of  bonds  of   a   railroad   company  by   indorsing 

1  French  v.  MiUville,  66  N.  J.  L.  392,  49  Atl.  465,  67  N.  J.  L.  349,  51  Atl.  1109. 

2  Redmond  v.  Chacey,  7  N.  D.  231,  73  N.  W.  1081. 

'  Chamberlain  v.  Burlington,  19  Iowa,  395;  Brenham  v.  German  Amer.  Bk., 
144  U.  S.  173,  36  L.  Ed.  390. 

*  Scott  V.  La  Porte,  162  Ind.  34,  68  N.  E.  278,  69  N.  E.  675. 
« John.son  City  v.  Charleston  R.  Co.,  100  Tenn.  138,  44  S.  W.  670. 
« People  V.  Westchester  Co.  Nat.  Bk.,  231  N.  Y.  465,  132  N.  E.  241. 
7  Scott  V.  La  Porte,  162  Ind.  34,  68  N.  E.  278,  69  N.  E.  675. 

76 


CHAP.  IX  ]      LOANS   OR   GIFTS   OF   MONEY   OR   CREDIT         [  §  47 

them,  if  by  its  charter  it  is  Hmited  to  subscribe  for  stock 
and  issue  bonds  for  payment.^ 

But  where  the  statute  authorizes  a  municipahty  to 
obtain  money  on  loan  on  the  faith  and  credit  of  the  city 
for  the  purpose  of  contributing  to  works  of  internal  im- 
provement, this  permits  the  municipality  to  guarantee  the 
payment  of  the  bonds,  ^  since  it  is  not  important  to  the 
character  of  the  transaction  that  the  money  be  obtained  in 
the  first  instance  by  the  railroad  company  upon  the  credit 
of  the  city.^  The  power  to  sell  its  negotiable  paper  will 
not  by  implication  authorize  a  guarantee  of  a  promissory 
note.^  Nor  will  power  to  acquire  suitable  water  works 
and  to  do  all  things  necessary  to  carry  into  effect  powers 
conferred,  authorize  a  city  to  guarantee  the  bonds  of  an 
electric  company.^  The  agreement  of  a  city  made  in  a 
deed  of  a  right  of  way  for  a  sewer  to  so  construct  the 
sewer  that  water  would  not  back  upon  the  grantor's 
premises  is  invaUd  as  to  such  provision,  where  no  express 
power  was  given  to  make  such  a  contract.® 

§  47.  Acting  as  Trustee. 

Municipahties  may  act  as  trustee  of  a  charitable  trust 
where  the  gift  is  made  for  or  in  aid  of  some  public  purpose 
charitable  in  its  nature,  for  which  it  is  the  legal  duty  of 
the  municipality  to  provide  and  support.^    This  power  to 

1  Blake  v.  Macon,  53  Ga.  172. 

2  Savannah  v.  KeUy,  108  U.  S.  184,  27  L.  Ed.  696. 

3  Savannah  v.  Kelly,  supra;  Rogers  v.  Burlington,  3  Wall.  (U.  S.)  654,  18 
L.  Ed.  79;  Venice  v.  Murdock,  92  U.  S.  494,  23  L.  Ed.  583. 

*  Carter  v.  Dubuque,  35  Iowa,  416. 

5  Lynchburg  &c.  R.  Co.  v.  Dameron,  95  Va.  545,  28  S.  E.  951. 

6  Nashville  v.  Sutherland,  92  Tenn.  335,  21  S.  W.  674. 

^Barnum  v.  Baltimore,  62  Md.  275,  50  Am.  R.  219;  Skinner  v.  Harrison 
Tp.,  116  Ind.  139,  18  N.  E.  529;  Maxcy  v.  Oshkosh,  144  Wis.  238,  128  N.  W. 
899;  Quincy  v.  Atty.  Gen.,  160  Mass.  431,  35  N.  E.  1066;  Chambers  v.  St. 
Louis,  29  Mo.  543;  Delaney  v.  SaUna,  34  Kan.  532,  9  Pac.  271;  Maynard  v. 
"Woodard,  36  Mich.  423;  Philadelphia  v.  Girard,  45  Pa.  St.  9,  84  Am.  D.  470, 

77 


§  47  ]  THE    POWER   TO   CONTRACT  [  PART  I 

act  as  trustee  does  not  depend  upon  express  legislative 
authority,  but  even  without  it  municipalities  may  accept 
a  gift  of  personalty  or  a  dedication  of  lands  for  a  public 
purpose,  or  for  a  purpose  within  and  germane  to  the 
objects  for  which  it  was  created.^  But  a  trust  which  is  not 
for  a  pubhc  purpose  and  which  does  not  fall  into  one  or 
all  of  the  purposes  or  objects  for  which  the  municipality 
was  organized  may  not  be  assumed,  and  no  power  exists 
to  acquire  or  in  any  manner  take  property  for  purposes 
not  corporate,  or  administrative.^  A  town  is  without 
power  accordingly  to  accept  a  gift  to  support  a  clergyman 
of  a  particular  denomination,^  although  such  a  gift  was 
declared  to  be  within  the  purposes  and  objects  for  which  a 
town  was  organized.^  But  where  a  trust  has  been  created 
which  is  repugnant  to  the  proper  purposes  of  municipal 
existence,  this  is  no  ground  upon  which  to  declare  an 
othen\^ise  unobjectionable  trust  void.  The  municipality 
cannot  be  compelled  to  execute  it,  but  equity  will  appoint 
a  new  trustee  to  accomplish  that  end.^ 

7  WaU.  1;  Vidal  v.  Philadelphia,  2  How.  (U.  S.)  126,  11  L.  Ed.  205;  Hanscom 
V.  Lowell,  165  Mass.  419,  43  N.  E.  196;  Perin  v.  Carey,  24  How.  (U.  S.)  465, 
16  L.  Ed.  701. 

1  Atlantic  City  v.  Atlantic  City  Steel  Pier  Co.,  62  N.  J.  Eq.  139,  49  Atl.  822; 
Atlantic  City  v.  Ass'd  Realties  Corp.,  73  N.  J.  Eq.  721,  70  Atl.  345. 

2  Bullard  v.  Shirley,  153  Mass.  559,  27  N.  E.  766,  12  L.  R.  A.  110;  Dailey  v. 
New  Haven,  60  Conn.  314,  22  Atl.  945;  Fosdick  v.  Hempstead,  125  N.  Y.  581; 
MaysviUe  v.  Wood,  102  Ky.  263,  43  S.  W.  403;  PhUadelphia  v.  Fox,  64  Pa.  St. 
169. 

^  Holmes,  J.,  in  Bullard  v.  Shirley,  supra. 
4  Denio,  J.,  in  Williams  v.  Williams,  8  N.  Y.  525. 

*  Vidal  V.  Girard,  2  How.  (U.  S.)  127;  Dailey  v.  New  Haven,  supra;  Fosdick 
V.  Hempstead,  supra;  McDonogh  v.  Murdoch,  56  U.  S.  367,  14  L.  Ed.  732. 


78 


CHAPTER   X 

CONTRACTS     TO    INFLUENCE    ACTION    OF     PUBLIC     OFFICIALS 

§48.  General  Rule. 

All  agreements  which  tend  to  introduce  personal  in- 
fluence and  solicitation  as  elements  in  procuring  and  in- 
ducing legislative  action  or  action  by  any  department  of  the 
national  government  or  of  the  State  or  any  of  its  political 
or  municipal  subdivisions  are  contrary  to  sound  morals 
and  so  are  malum  in  se  and  are  void  as  contrary  to  public 
poHcy.^ 

§  49.  Effect  on  Contract  of  Influence  on  Action  of  Officials. 

Contracts  for  the  purchase  of  the  influence  of  private 
persons  upon  the  action  of  public  officials  either  adminis- 
trative or  legislative  are  against  public  policy  and  void.^ 
In  order  to  condemn  this  class  of  contracts,  it  is  not 
necessary  to  show  that  they  are  bad  but  merely  that  their 
tendency  is  bad.^  It  is  not  essential  to  their  condemna- 
tion that  the  parties  shall  be  guilty  of  bribery  or  cor- 
ruption under  the  contract.     If  the  performance  of  the 

1  Sage  V.  Hampe,  235  U.  S.  99,  59  L.  Ed.  147;  Providence  Tool  Co.  v.  Norris, 
69  U.  S.  (2  WaU.)  45, 17  L.  Ed.  868;  Burke  v.  ChUd,  88  U.  S.  441,  22  L.  Ed.  623; 
Elkhart  County  Lodge  v.  Crary,  98  Ind.  238,  49  Am.  R.  746;  Lyon  v.  Mitchell, 
36  N.  Y.  235,  93  Am.  D.  502;  Milbank  v.  Jones,  127  N.  Y.  370,  28  N.  E.  31; 
Mills  V.  MiUs,  40  N.  Y.  543,  100  Am.  D.  535;  Winpenny  v.  French,  18  Ohio  St. 
469;  Powers  v.  Skinner,  34  Vt.  274,  80  Am.  D.  677;  Bryan  v.  Reynolds,  5  Wis. 
200,  68  Am.  D.  55;  Fuller  v.  Dame,  18  Pick.  472;  Houlton  v.  Nichol,  93  Wis. 
393,  67  N.  W.  715. 

2  Liness  v.  Hesing,  44  lU.  113,  92  Am.  D.  153;  Burke  v.  ChUd,  88  U.  S.  441, 
22  L.  Ed.  623;  Brown  v.  Brown,  34  Barb.  533. 

3  Crichfield  v.  Bermudez  A.  P.  Co.,  174  111.  466,  51  N.  E.  552;  Dodson  v. 
McCumin,  178  Iowa,  1211,  160  N.  W.  927. 

79 


§  49  ]  ITIE    POWER   TO    CONTRACT  [  PART  I 

contract  obligations  has  an  evil  tendency  or  furnishes  a 
temptation  to  use  improper  means,  as  where  they  contem- 
plate high  contingent  compensation,  the  contract  is  illegal 
as  contra  bonos  mores.  ^ 

All  agreements  for  a  pecuniary  consideration  to  control 
the  business  operations  of  the  government  or  of  the  State 
or  one  of  its  subdi\'isions,  political  or  municipal,  are  against 
public  policy  and  void  without  reference  to  whether 
improper  means  are  actually  used  or  are  contemplated  in 
their  execution.  The  mere  tendency  toward  evil  controls 
judicial  action  and  it  destroys  the  occasion  for  temptation 
and  wrongdoing  by  refusing  recognition  to  any  contract 
which  has  in  it  even  the  hkelihood  of  such  a  result.^  Of 
course  those  contracts  which  obviously  and  directly  tend 
to  bring  about  results  which  the  law  seeks  to  prevent 
cannot  be  made  the  basis  of  a  successful  suit.^  Every 
public  officer  is  a  guardian  of  the  public  welfare  and, 
therefore,  no  transaction  growing  out  of  his  official  ser\ace 
or  position  can  be  allowed  to  enure  to  his  personal  benefit. 
From  such  transactions,  the  law  will  not  imply  a  contract 
which  binds  the  government.^  A  contract  with  the  State 
produced  through  bribery  upon  officers  who  have  the 
power  to  make  it  is  against  public  policy  and  void  and 
cannot  be  enforced  against  the  State. ^  In  like  manner,  a 
contract  made  through  corrupt  influences  with  an  agency 
of  the  State  government  is  void  for  similar  reasons.^  A 
contract   to   bring  to  bear  or  tending  to  bring  to  bear 

'  Idem. 

2  Oscanyan  v.  Winchester  Anns  Co.,  103  U.  S.  274,  26  L.  Ed.  539,  aff'g  15 
Blatch.  79. 

3  Sage  V.  Hampe,  235  U.  S.  99,  59  L.  Ed.  147. 

*  DavLs  V.  U.  S.,  23  Ct.  CI.  329;  James  v.  City  of  Hamburg,  174  Iowa,  301, 
156  N.  W.  394. 

s  State,  Bradford  v.  Cross,  38  Kan.  696. 

6  Honaker  v.  Bd.  of  Education,  42  W.  Va.  170,  24  S.  E.  544. 

80 


CHAP.  X  ]  CONTRACTS   AND    PUBLIC   OFFICIALS  [  §  49 

improper  influence  upon  an  officer  of  the  United  States 
and  to  induce  attempts  to  mislead  him  in  the  sale  of 
Indian  lands  is  contrary  to  public  policy  and  void.^  But 
a  contract  to  present  to  the  Secretary  of  the  Interior  the 
situation  with  reference  to  certain  pubHc  lands  and  to  do 
all  that  might  be  necessary  to  have  them  thrown  open  to 
settlement  so  that  fihng  of  claims  might  be  made  thereon 
under  the  law,  affording  equal  rights  to  all  persons,  with- 
out any  attempt  to  procure  legislation  is  not  void  or 
against  pubhc  poUcy  unless  it  is  shown  that  illegal  acts  or 
acts  of  a  corrupt  tendency  were  contemplated. ^  While 
the  State  may  employ  agents  or  attorneys  to  enforce  and 
prosecute  claims  of  the  State  which  require  the  procuring 
of  legislation,  no  such  authority  exists  in  a  subdivision  of  the 
State  to  expend  its  funds  to  send  lobbyists  to  the  legisla- 
ture.^ But  a  municipaUty  has  power  to  employ  an 
attorney  to  appear  before  the  legislature  and  oppose  a 
division  of  its  territory.^  A  contract  to  pay  a  lawyer  to 
appear  before  a  board  of  street  commissioners  and  to  argue 
for  the  laying  out  of  a  street,  and  to  obtain  as  much 
damages  as  possible  for  the  land  taken  does  not,  as  matter 
of  law,  contemplate  the  use  of  improper  influence,  or 
necessarily  tend  to  induce  it,  and  accordingly  it  is  not 
against  public  policy,  nor  does  it  become  so  merely 
because  the  lawyer  in  some  degree  uses  his  personal 
influence  as  chairman  of  a  committee  of  a  political 
party.  ^ 

^  Sage  V.  Hampe,  supra. 

2  Houlton  V.  Nichol,  93  Wis.  393,  67  N.  W.  715. 

3  Davis  V.  Comm.,  164  Mass.  241,  41  N.  E.  292;  Denison  v.  Crawford,  48 
Iowa,  211;  Chesebrough  v.  Conover,  140  N.  Y.  382,  35  N.  E.  633;  Mills  v. 
MiUs,  40  N.  Y.  543,  100  Am.  D.  535;  Milbank  v.  Jones,  127  N.  Y.  370,  28 
N.  E.  31;  Elkhart  Lodge  v.  Crary,  98  Ind.  238,  49  Am.  R.  746. 

*  Farrel  v.  Derby,  58  Conn.  234,  20  Atl.  460. 
6  Barry  v.  Capen,  151  Mass.  99,  23  N.  E.  735. 

81 


§  50  J  THE  POWER  TO  CONTRACT         [  PART  I 

§  50.  Purchasing  Consents  for  Street  Improvement. 

Where  abutting  property  owners  sign  a  petition  for  a 
street  improvement  and  thereby  ask  for  legislative  action 
by  the  general  governing  body  of  a  municipaUty  they 
become  to  a  certain  extent  charged  with  a  duty  to  the 
public.  The  policy  of  the  State  requires  their  uninfluenced 
and  unbiased  judgment  in  initiating  a  proceeding.  Since 
the  rights  of  the  pubhc  and  of  third  persons  are  involved 
in  the  action  of  the  signers  to  such  a  petition,  pubhc 
pohcy  denies  them  the  right  to  sell  their  signatures. 
Purchased  consents  are  against  the  pohcy  of  the  law, 
since  they  create  injustice  to  other  owners.  The  fair 
judgment  of  all  owners  and  not  their  greed  must  decide 
the  question  whether  they  shall  be  assessed.^  In  hke 
manner,  any  arrangement  or  combination  made  whereby 
signatures  are  obtained  by  a  few  interested  in  causing  a 
grading  and  paving  to  be  done,  by  paying  a  consideration 
therefor  either  directly  or  indirectly,  is  a  fraud  upon  the 
law,  and  contrary  to  public  pohcy.  ^ 

And  a  contract  made  to  pay  a  sum  of  money  for  obtain- 
ing such  signatures  is  void  and  unenforceable.^ 

1  State,  Kean  v.  Elizabeth,  35  N.  J.  L.  351;  Doane  v.  Chicago  City  R.  Co., 
160  lU.  22,  45  N.  E.  507. 

2  Howard  v.  First  Indep.  Church,  18  Md.  451;  Maguire  v.  Smock,  42  Ind.  1. 

3  Doane  v.  Chicago  City  R.  Co.,  supra. 


82 


CHAPTER  XI 

ULTRA     VIRES     CONTRACTS 

§  51.  Classification. 

Contracts  made  and  entered  into  by  public  bodies  and 
which  are  said  to  be  ultra  vires  may  properly  be  divided 
into  two  general  classifications :  those  which  are  ultra  vires 
because  illegal,  and  those  which  are  ultra  vires  because 
unauthorized  merely.  The  first  class  are  utterly  void  and 
will  not  be  enforced  by  the  courts  except  in  those  divisible 
contracts  which  permit  of  a  severance  of  the  good  from  the 
bad  features  and  which  will  allow  of  an  enforcement  of  the 
former.  The  second  class  are  generally  enforced  by  the 
courts  where  executed  and  the  public  body  has  received 
and  retained  the  benefits  of  performance,  either  on  the 
contract  itself,  upon  an  implied  contract  for  quantum 
meruit,  or  for  money  had  and  received,  depending  upon 
the  character  of  the  particular  contract. 

Those  cases  included  in  the  first  class  are  the  following: 

1.  Contracts  expressly  prohibited  by  law. 

2.  Contracts  prohibited  by  law,  unless  executed  in  the 
manner  and  upon  the  conditions  prescribed  by  law. 

3.  Contracts  outside  of  the  scope  of  the  objects  and 
purposes  of  corporate  existence  or  not  to  be  implied  from 
powers  expressly  conferred. 

4.  Contracts  against  pubhc  policy. 

Those  in  the  second  class  may  be  stated  to  be: 
1.  Contracts  unauthorized  because  of  a  defect  of  power 
or  want  of  power  but  whose  subject-matter  is  within  the 

83 


§  51  ]  THE  POWER  TO  CONTRACT         [  PART  I 

scope  of  the  objects  and  purposes  of  corporate  existence, 
or 

2.  Contracts  invalid  merely  because  the  power  granted 
is  defectively  or  irregularly  exercised. 

§  52.  Contract  Prohibited  By  Law — Receipt  of  Benefits. 

Where  powers  are  denied  to  a  municipality,  the  intention 
of  the  law  is  that  these  powers  shall  not  be  exercised.  It 
would  be  a  strange  anomaly  if  the  exercise  of  a  prohibited 
power  would  cause  it  to  be  endowed  with  validity  and 
dissolve  the  prohibition.  Such  a  result  would  by  repeated 
usurpations  make  municipahties  the  recipients  of  omnip- 
otence. Their  powers  would  grow  by  infringement. 
Because  municipalities  do  forbidden  things  and  make 
contracts  prohibited  by  pubUc  policy  will  not  make  such 
contracts  vahd.  Such  a  result  cannot  be  accompUshed  by 
continued  \dolation  of  the  law.  This  would  make  a 
mockery  of  the  law.  Were  this  permitted,  these  very 
violations  would  have  the  effect  of  endowing  these  bodies 
with  powers  which  the  legislature  has  denied  them.  To 
claim  that  such  a  result  must  follow  because  the  munic- 
ipahties have  received  the  benefits  of  a  contract  is  to 
make  an  easy  route  to  a  nulUfication  of  wise  measures 
enacted  to  protect  the  taxpayers.  The  consummation 
of  such  violations  cannot  bring  with  it  the  protection 
of  the  very  law  which  has  been  flaunted  and  \dolated 
and  thereby  create  a  cause  of  action  on  the  void  con- 
tract.* 

In  accord  with  this  reasoning,  it  has  been  declared  that  if 
the  legislature  expressly  prohibits  a  contract  from  being  en- 
tered into  at  all,  or  except  upon  the  performance  or  existence 
of  certain  prior  conditions  or  circumstances,   such  as  an 

1  Dickinson  v.  Poughkeepsie,  75  N.  Y.  65. 

84 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  53 

appropriation  to  pay  the  contract  compensation;  or  that 
an  ordinance  shall  be  passed  authorizing  the  work;  or  that 
the  contract  shall  be  in  writing;  or  that  the  contract  shall 
be  let  to  the  lowest  bidder  after  pubUc  advertisement;  or 
that  a  certificate  by  the  head  of  department  of  the  neces- 
sity of  the  work  or  supphes  and  that  an  appropriation  to 
pay  therefor  exists  and  is  outstanding  shall  be  issued; — a 
contract  made  in  violation  of  the  positive  command  of  the 
legislature  that  these  or  similar  circumstances  or  facts 
must  exist  before  a  lawful  contract  may  be  made,  can 
never  be  made  the  basis  of  recovery.^  And  where  the 
policy  of  the  State  thus  forbids  the  making  of  a  contract 
except  in  the  manner  and  upon  the  conditions  prescribed, 
no  recovery  is  permitted  upon  the  theory  of  an  implied 
contract  to  pay  for  the  benefits  received  under  the  pro- 
hibited contract.  2  No  recovery  is  therefore  permitted 
either  on  the  contract  or  on  quantum  meruit.' 

§  53.  When  Sustained  so  far  as  Executed. 

Where  an  ultra  vires  contract  is  executory,  it  will  not 
be  enforced,'*  and  the  law  upholds  its  repudiation  by  either 

1  Indianapolis  v.  Wann,  144  Ind.  175,  42  N.  E.  901;  Newbery  v.  Fox,  37 
Minn.  141,  33  N.  W.  333;  McDonald  v.  New  York,  68  N.  Y.  23,  23  Am.  R. 
144;  Gutta  Percha  M.  Co.  v.  Ogalalla,  40  Neb.  775,  59  N.  W.  513;  Reams  v. 
Cooley,  171  Cal.  150,  152  Pac.  293;  Denver  v.  Hindry,  40  Colo.  42,  90  Pac. 
1028;  Jersey  City  S.  Co.  i-.  Jersey  City,  71  N.  J.  L.  631,  60  Atl.  381;  Snipes  v. 
Winston,  126  N.  C.  384,  35  S.  E.  610;  Perry  Water,  L.  &  Ice  Co.  v.  Perry, 
29  Okla.  593,  120  Pac.  582. 

2  Bluthenthal  v.  Headland,  132  Ala.  249,  31  So.  87;  Zottmann  v.  San  Fran- 
cisco, 20  Cal.  96,  81  Am.  Dec.  96;  Reams  v.  Cooley,  171  Cal.  150,  152  Pac. 
293;  Fox  v.  New  Orleans,  12  La.  Ann.  154,  68  Am.  D.  766;  State  v.  Helena,  24 
Mont.  521,  63  Pac.  99;  Jersey  City  S.  Co.  v.  Jersey  City,  71  N.  J.  L.  631,  60 
Atl.  381;  McDonald  v.  New  York,  68  N.  Y.  23,  23  Am.  R.  144;  Goose  River 
Bk.  V.  Willow  Lake  Sch.  Tp.,  1  N.  D.  26,  44  N.  W.  1002;  McGiUivray  v.  Joint 
Sch.  Dist.,  112  Wis.  354,  88  N.  W.  310. 

3  Anderson  v.  Fuller,  51  Fla.  380,  41  So.  684;  Chippev/a  B.  Co.  v.  Durand, 
122  Wis.  85,  99  N.  W.  603. 

4  Columbus  Water  Co.  v.  Columbus,  48  Kan.  99,  28  Pac,  1097;  East  St. 
Louis  G.  L.  Co.  V.  East  St.  Louis,  98  lU.  415,  38  Am.  R.  97. 

85 


§  53  ]  THE  POWER  TO  CONTRACT         [  PART  I 

party  with  impunity.^  Where,  however,  a  contract  has 
been  made  by  a  municipality  to  supply  some  commodity 
such  as  water,  gas,  electricity  or  the  like,  and  the  contract 
is  for  some  reason  ultra  vires,  it  will  be  sustained  so  far  as 
it  has  been  executed  as  one  for  the  furnishing  of  the 
commodity  during  the  pleasure  of  the  municipaUty.  The 
reason  for  this  rule  is  that  courts  should  not  interfere  to 
destroy  the  contracts  of  parties  further  than  some  good 
reason  requires.  Even  where  a  contract  obstructs  the 
legislative  or  governmental  power  of  a  municipality  over 
its  subject  because  it  is  in  the  nature  of  an  exclusive  fran- 
chise or  monopoly  or  in  some  manner  binds  the  successors 
of  the  officers  on  the  legislative  side  of  municipal  power, 
this  does  not  require  that  a  contract  shall  be  held  to  be 
void,  but  rather  voidable  so  far  as  it  is  still  executory. ^ 
The  defense  of  ultra  vires  should  not  absolve  municipali- 
ties from  adhering  to  the  principles  of  common  honesty,' 
and  this  defense  will  not  be  allowed  to  obtain  where  it 
works  injustice  or  a  positive  wrong."*  When  the  defense, 
however,  is  properly  interposed,  it  will  be  strictly  applied 
in  favor  of  public  bodies.^    And  in  these  last  cases,  it  may 

1  McKee  v.  Greensburgh,  160  Ind.  378,  66  N.  E.  1009;  Greenough  v.  Wake- 
field, 127  Mass.  275,  1  N.  E.  413;  Swift  v.  Falmouth,  167  Mass.  115,  45  N.  E. 
184;  Spaulding  v.  Peabody,  153  Mass.  129,  26  N.  E.  421;  Halstead  v.  Mayor, 
3  N.  Y.  430;  Philadelphia  v.  Flanigen,  47  Pa.  St.  21;  Alleghany  County  v. 
Parrish,  93  Va.  615,  25  S.  E.  882. 

2  Columbus  W.  Co.  v.  Columbus,  supra;  East  St.  Louis  G.  L.  Co.  v.  East 
St.  Louis,  supra;  Decatur  G.  &  C.  Co.  v.  Decatur,  24  111.  App.  544;  Carlyle 
W.  &  L.  P.  Co.  V.  Carlyle,  31  111.  App.  325. 

3  Bass  F.  &  M.  Co.  v.  Parke  County,  115  Ind.  244,  17  N.  E.  593. 

<  Portland  Lumb.  &  Mfg.  Co.  v.  East  Portland,  18  Oreg.  21,  22  Pac. 
536. 

5  Cleveland  Sch.  F.  Co.  v.  Greenville,  146  Ala.  559,  41  So.  862;  Higgins  v. 
San  Diego,  118  Cal.  524,  45  Pac.  824;  Hope  v.  Alton,  214  111.  102,  73  N.  E.  406; 
Citizens  Bk.  v.  Spencer,  126  Iowa,  101,  101  N.  W.  643;  Mealey  v.  Hagerstown, 
92  Md.  741,  48  Atl.  746;  State  v.  Murphy,  134  Mo.  549,  31  S.  W.  784,  34 
S.  W.  51,  35  S.  W.  1132. 

86 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  54 

even  set  up  the  defense  even  though  it  has  received  the 
benefits  under  the  contract.^ 


§  54.  Illegal  Contract — Recovery  on  Denied. 

The  general  rule  is  that  courts  will  not  entertain  any 
action  brought  upon  an  illegal  agreement.  Ex  turpi  causa 
non  oritur  actio. "^  Where  it  is  executory,  it  will  not  be  en- 
forced; and  where  it  is  executed,  it  may  not  be  rescinded. 
Not  only  will  courts  refuse  to  enforce  such  a  contract  but 
they  will  not  even  permit  any  recovery  upon  a  contract 
which  is  illegal  or  which  is  against  public  poHcy.^  The 
defense  of  illegality  may  be  availed  of  although  it  is  not 
pleaded,  especially  where  the  contract  is  contra  bonos 
mores,  and  courts  of  their  own  motion  will  be  quick  to 
uncover  the  illegaUty  and  use  it  as  a  bar  to  the  action.* 
However,  it  is  declared  in  some  jurisdictions  that  the  de- 
fense of  illegaUty  must  be  pleaded  in  order  to  be  raised.^ 

§  55.  The  Same  — Invalid  in  Part — Severance. 

Where  a  contract  is  challenged  as  illegal,  the  general 
rule  appUcable  is  that  if  the  illegal  part  cannot  be  severed 
from  the  legal  part  of  the  contract,  it  is  altogether  void  and 
will   not   be   enforced.^     But   where   these   parts   can   be 

1  Mealey  v.  Hagerstown,  swpra;  Balch  v.  Beach,  119  Wis.  77,  95  N.  W.  132; 
Thomas  v.  Pt.  Huron,  27  Mich.  320;  State  v.  Pullman,  23  Wash.  583,  63  Pac. 
265. 

2  Levy  V.  Kansas  City,  168  Fed.  524;  Sewell  v.  Norris,  128  Ga.  824,  58  S.  E. 
637;  Henderson  v.  Palmer,  71  lU.  579,  22  Am.  Rep.  117;  Honaker  v.  Bd.  of 
Education,  42  W.  Va.  170,  24  S.  E.  544. 

3  State  V.  Bd.  of  Commrs.  Dickinson  County,  77  Kan.  540,  95  Pac.  392. 

« Crichfield  v.  Bermudez  Asph.  P.  Co.,  174  111.  466,  51  N.  E.  552;  Cansler  v. 
Penland,  125  N.  C.  578,  34  S.  E.  683. 

6  Ocorr  &  Rugg  Co.  v.  Little  FaUs,  77  N.  Y.  App.  Div.  592,  178  N.  Y.  622, 
70  N.  E.  1104. 

8  Casady  v.  Woodbury  County,  13  Iowa,  113;  Levy  v.  Kansas  City,  168 
Fed.  524;  Crichfield  v.  Bermudez  Asph.  P.  Co.,  174  111.  466,  51  N.  E.  552; 
Edwards  t;.  Randle,  63  Ark.  318,  38  S.  W.  343. 

87 


§  55  ]  THE  POWER  TO  CONTRACT         [  PART  I 

severed,  whether  the  illegaUty  be  created  by  statute  or 
by  the  common  law,  the  bad  may  be  rejected  and  the  good 
retained.^  If  the  promise  is  to  do  two  things,  one  legal 
and  the  other  illegal,  the  promise  to  do  the  legal  act  will 
be  enforced  and  the  promise  to  do  the  illegal  act  will  be 
disregarded  or  considered  waived.-  And  it  makes  no 
difference  whether  there  are  two  distinct  promises  or 
whether  there  is  one  promise  that  is  divisible,  or  whether 
the  consideration  for  the  two  promises  is  entire  or  appor- 
tionable.^ 

WTiere  the  consideration  is  twofold,  one  legal  and  the 
other  illegal,  both  supporting  one  promise,  such  promise 
cannot  be  enforced.'^ 

If  the  consideration  is  in  no  way  tainted  by  illegality  but 
some  of  the  promises  are  illegal,  the  illegality  of  those 
which  are  bad  does  not  communicate  itself  to  those  which 
are  good,  except  where  in  consequence  of  some  peculiarity 
in  the  contract,  its  parts  are  inseparable,  or  dependent  on 
one  another.^  And  even  if  one  party  to  the  contract  per- 
forms illegal  services,  if  the  other  party's  promise  is  in 
consideration  of  his  performing  legal  ones  only,  the  con- 
tract would  be  legal  and  could  not  be  made  illegal  by 
misconduct  in  carrying  it  out.^  The  test  of  legality  is  in 
its  making.  WTiere  accordingly  provisions,  such  as  a  pro- 
\'ision  regulating  the  hours  of  labor  or  the  kind  of  labor, 
that  it  shall  be  union  labor  or  shall  not  be  convict  or  alien 

1  State  V.  Wilson,  73  Kan,  343,  84  Pac.  737;  Hart  v.  New  York,  201  N.  Y. 
45,  94  N.  E.  219. 

2  U.  S.  V.  Bradley,  10  Pet.  (U.  S.)  343,  9  L.  Ed.  448;  Gelpcke  v.  Dubuque, 
1  WaU.  (U.  S.)  175,  17  L.  Ed.  520;  McCuUough  v.  Virginia,  172  U.  S.  102,  43 
L.  Ed.  382. 

^  Greenwood  v.  Bishop  of  London,  5  Taunt.  727. 

*  Sedg\vick  Co.  v.  State,  66  Kan.  634,  72  Pac.  284. 

*  State,  Laskey  v.  Perrysburg  Bd.  of  Educ.,  35  Ohio  St.  519;  Hart  v.  New 
York,  201  N.  Y.  45,  94  N.  E.  219. 

« Barry  v.  Capen,  151  Mass.  99,  23  N.  E.  735. 

88 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  56 

labor,  and  kindred  provisions,  or  provisions  which  oust  the 
courts  of  jurisdiction,  which  do  not  constitute  its  main  or 
essential  feature  or  purpose  are  void  for  illegality  or  as 
against  public  policy,  but  are  clearly  separable  and  sever- 
able from  the  other  parts  which  are  rehed  on,  such  other 
parts  are  not  affected  by  the  invalid  provision,  and  may  be 
enforced,  as  if  no  such  provision  had  been  incorporated  in 
the  contract.^  But  when  a  statute  requires  all  contracts  to 
be  let  by  competitive  bids  upon  public  advertisement  to 
the  lowest  bidder  and  illegal  or  invahd  provisions  are  in- 
serted, it  must  be  shown  that  the  inclusion  of  such  provi- 
sions in  the  contract  did  not  enhance  the  cost,  in  order  to 
have  them  disregarded. - 

§  56.  Invalid  in  Part — Severance — Valid  Part  Enforceable. 
Where  a  public  contract  is  valid  in  part  and  ultra  vires 
in  part,  such  invalidity  will  ordinarily  not  affect  the  other 
provisions  or  parts  of  the  contract,  which  are  in  no  way 
dependent  upon  the  invahd  part  or  provision,  and  the 
valid  part  may  be  enforced  while  that  which  is  illegal  and 
invalid  may  be  rejected.^  If  the  contract  is  so  indivisible 
that  the  parts  cannot  be  separated,  so  that  the  illegal 
can  be  prevented  and  the  legal  performed,  the  entire  con- 
tract must  be  declared  void.^     But  in  order  to  defeat  the 

1  People  ex  rel.  Rodgers  v.  Coler,  166  N.  Y.  1,  59  N.  E.  716;  Cleveland  v. 
Clement  Bros.  Const.  Co.,  67  Ohio  St.  197,  65  N.  E.  885. 

2  De  WoK  V.  People,  202  111.  73,  66  N.  E.  868. 

3KimbaU  v.  Cedar  Rapids,  100  Fed.  802;  Ft.  Dodge  Elec.  L.  &  P.  Co.  v. 
Ft.  Dodge,  115  Iowa,  568,  89  N.  W.  7;  Nebraska  City  v.  Nebraska  City  H.  G. 
L.  &  C.  Co.,  9  Neb.  339,  2  N.  W.  870;  City  of  Valparaiso  v.  Valparaiso  City 
W.  Co.,  30  Ind.  App.  316,  65  N.  E.  1063;  Turney  v.  Bridgeport,  55  Conn.  412, 
12  Atl.  520;  Uvalde  Asph.  P.  Co.  v.  New  York,  128  N.  Y.  App.  Div.  210,  198 
N.  Y.  548,  92  N.  E.  1105;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Myers 
V.  Penn.  Steel  Co.,  77  N.  Y.  App.  Div.  307. 

4  Nicholasville  W.  Co.  v.  Nicholasville,  18  Ky.  L.  R.  592,  36  S.  W.  549; 
New  Orleans  v.  New  Orleans  Sugar  Shed  Co.,  35  La.  Ann.  551;  LeFeber  v. 
West  Allis,  119  Wis.  608,  97  N.  W.  203;  Kansas  City  v.  O'Connor,  82  Mo.  A. 
655. 

89 


§  56  ]  THE   POWER  TO   CONTRACT  [  PART  I 

whole  contract,  the  invalidity  presented  must  consist  of 
something  of  more  moment  than  that  a  small  part  of  the 
contract  is  ultra  \ires,  for  in  these  cases  the  right  to  avail 
of  this  defense  depends  upon  the  circumstances  of  the  case 
and  it  will  not  be  sustained  where  it  works  inequity  or 
injustice,^  pro\ided,  of  course,  that  the  particular  objected 
to  is  not  prohibited  by  statute  or  beyond  the  objects  and 
purposes  for  which  the  municipality  was  created. ^ 

Under  these  general  principles,  it  has  been  declared  that 
a  contract  for  the  construction  of  a  sewer  and  of  a  sewage 
disposal  plant  is  severable,  so  that  a  recovery  may  be 
had  for  constructing  the  sewer,  although  the  provision  for 
the  disposal  plant  is  void,  when  it  is  apparent  that  the 
intention  was  that  the  two  improvements  should  be  sepa- 
rate. In  such  case,  there  is  nothing  in  the  nature  of  the 
sewer  which  makes  its  completion  in  any  way  dependent 
upon  the  construction  of  the  disposal  plant,  especially 
where  the  advertisement  refers  to  ''contracts"  and  the 
bids  for  one  were  kept  separate  from  the  other. 

In  such  circumstances,  if  everything  pertaining  to  the 
disposal  plant  were  stricken  from  the  contract,  there  is  left 
a  complete  contract  for  the  construction  of  the  sewer.  ^  A 
contract  affecting  the  rentals  for  water  which  granted  an 
exclusive  privilege  to  the  operating  company  is  unenforce- 
able as  to  the  monopoly  but  enforceable  as  to  rentals.* 
On  the  other  hand,  a  contract  to  purchase  a  water  and 
lighting  plant  and  to  settle  a  valid  judgment,  where  the 

1  BeU  V.  Kirkland,  102  Minn.  213,  113  N.  W.  271,  13  L.  R.  A.  n.  s.  793; 
Coit  V.  Grand  Rapids,  115  Mich.  493,  73  N.  W.  811;  Spier  v.  Kalamazoo,  138 
Mich.  652,  101  N.  W.  846. 

2  Bell  V.  Kirkland,  supra. 

3  Uvalde  Asphalt  Pav.  Co.  v.  New  York,  128  N.  Y.  App.  Div.  210,  198  N.  Y. 
548;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219. 

*  Kimball  v.  Cedar  Rapids,  100  Fed.  802;  Monroe  W.  Wks.  Co.  v.  Monroe 
110  Wis.  11,  85  N.  W.  685. 

90 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  57 

former  was  ultra  vires  because  the  constitutional  provision  as 
to  sinking  funds  was  violated  and  the  city  was  without  power 
to  purchase,  and  the  parts  were  not  capable  of  severance, 
the  contract  was  void  in  toto  and  could  not  be  enforced  for 
either  object.^ 

§  57.  Incurring  Valid  Debt  or  Obligation  but  Exceeding 
Limit  on  Power  to  Incur  Indebtedness — Sever- 
ance. 

When  a  municipality  has  power  to  incur  a  debt  or  Habil- 
ity  to  a  definite  limited  extent  and  makes  a  promise  to 
pay  a  larger  amount,  and  the  contract  is  executed  by  the 
other  party  and  the  municipality  has  obtained  something 
that  it  had  the  authority  to  purchase,  such  acts  of  munici- 
pahties  in  incurring  an  indebtedness  or  an  obligation  in 
excess  of  a  limit  prescribed  by  the  constitution  or  by  law 
may  be  given  effect  up  to  the  Umit  so  prescribed. ^  In 
the  revision  of  governmental  acts  claimed  to  exceed  the 
limits  placed  upon  governing  bodies  by  the  fundamental 
laws  under  which  they  exist,  the  courts  uniformly  strive  to 
give  effect  to  such  acts  so  far  as  is  possible  without  dis- 
obeying the  restrictions  thus  imposed,  and  will  hold  acts 
valid  up  to  such  hmits  notwithstanding  some  excess  beyond 
constitutional  or  legal  limits  if  the  excess  can  be  separated 
and  can  be  denied  effect  without  defeating  the  clear  and 
obvious  purpose  of  such  limitation.^ 

1  Austin  V.  McCall,  95  Tex.  565,  68  S.  W.  791. 

2  McPherson  v.  Foster,  43  Iowa,  48,  22  Am.  R.  215;  Stockdale  v.  Sch.  Dist. 
47  Mich.  226,  10  N.  W.  349;  Culbertson  v.  Fulton,  127  111.  30,  18  N.  E.  781; 
Chicago  V.  McDonald,  176  111.  404,  52  N.  E.  982;  May  v.  Gloucester,  174 
Mass.  583,  55  N.  E.  465;  Winamac  Sch.  Town  v.  Hess,  151  Ind.  229,  50  N.  E. 
81;  Citizens  Bk.  v.  Terrell,  78  Tex.  450,  14  S.  W.  1003;  Daviess  County  v. 
Dickinson,  117  U.  S.  657;  ^Etna  Life  Ins.  Co.  v.  Lyon  County,  82  Fed.  929; 
Herman  v.  Oconto,  110  Wis.  660,  86  N.  W.  681. 

3  McCuUough  V.  Virginia,  172  U.  S.  102,  43  L.  Ed.  382;  Detroit  v.  Detroit 
City  R.  Co.,  60  Fed.  161;  Illinois  Trust  &  Sav.  Bk.  v.  Arkansas  City,  76  Fed. 

91 


§  57  ]  THE  POWER  TO  CONTRACT         [  PART  I 

The  only  difficulty  which  the  courts  have  at  all  had  was 
whether  a  severance  could  be  made  at  the  dividing  line 
between  that  which  was  legal  and  that  which  was  for- 
bidden, or  whether  they  were  bound  by  the  principles 
which  determined  whether  the  duty  created  by  the  con- 
tract and  assumed  by  the  contractor  was  capable  of  sever- 
ance. 

But  the  more  modern  tendency  is  to  carry  out  the 
equitable  principles  involved  in  paying  for  what  has  been 
received  within  permissible  hmits  and  accordingly  where  as 
in  most  instances  of  contract  with  municipalities  their  only 
obhgation  is  the  mere  payment  of  money  such  an  obhga- 
tion  is  considered  in  its  nature  severable,  as  one  dollar  is 
severable  from  another,  and  where  that  is  the  only  obhga- 
tion questioned  or  sought  to  be  enforced,  it  is  sufficiently 
severable  without  inquiring  whether  the  duty  of  the  con- 
tractor under  the  contract  is  also  capable  of  division. 
WTien  the  latter's  obligation  has  been  fully  performed  and 
he  finds  that  for  complete  performance  he  can  only  receive 
partial  payment,  it  is  of  no  concern  to  anyone  to  what  part 
of  his  serv'ices  the  money  paid  shall  be  ascribed.  To  do 
this  measure  of  justice  to  a  contractor  who  in  good  faith 
supphes  a  municipahty  with  things  which  it  has  the  power 
to  purchase,  is  in  practical  effect  to  pay  him  a  less  price  for 
the  entire  work.  And  to  accomphsh  this  act  of  equity 
technical  constructions  should  be  discarded,  especially 
where  the  prohibition  is  not  against  purchasing  the  mate- 
rial or  labor  or  making  the  contract,  but  against  incurring 

271;  Kimball  v.  Cedar  Rapids,  100  Fed,  802;  Johnson  v.  Stark  County,  24 
111.  75;  Briscoe  v.  Allison,  43  III.  291;  Scofield  v.  Council  Bluffs,  68  Iowa,  695, 
28  N.  W.  20;  Thompson  v.  Indep.  Sch.  Dist.,  102  Iowa,  94,  70  N.  W.  1093; 
Chicago  &  N.  W.  R.  Co.  v.  Langlade  Co.,  56  Wis.  614,  14  N.  W.  844;  Monroe 
W.  Wks.  Co.  V.  Monroe,  110  Wis.  11,  85  N.  W.  685;  Allen  v.  Lafayette,  89 
Ala.  641,  8  So.  30;  State  ex  rel  Hicks  v.  Stevens,  112  Wis.  170,  88  N.  W.  48. 

92 


CHAP.  XI  ]  ULTRA   VIRES  CONTRACTS  [  §  57 

the  indebtedness.  It  is  more  equitable  and  just  to  pay  up 
to  the  amount  which  a  municipaUty  had  the  power  to 
promise  to  pay  than  that  the  contractor  should  suffer  the 
entire  loss  of  his  services.^ 

Where  the  authority  to  make  a  particular  contract  exists 
and  another  contract  is  made  beyond  the  authority  of  the 
public  body,  the  substance  of  the  contract  within  the 
power  of  the  pubUc  body  will,  after  performance  by  the 
contractor,  be  held  to  be  valid  notwithstanding  the  fact 
that  it  is  coupled  with  a  condition  which  exceeds  the 
powers  of  the  public  body  and  is  unlawful.^  Accordingly 
where  the  public  body  had  power  to  make  a  contract  for 
the  improvement  of  sidewalks  and  it  made  such  a  contract 
but  agreed  to  pay  therefor  in  bonds  which  it  was  without 
power  to  do,  and  the  pubhc  body  received  the  benefits  of 
performance,  justice  requires  the  ehmination  of  the  ultra 
vires  conditions  from  the  contract  and  its  enforcement  so 
far  as  it  is  lawful.^ 

Under  similar  circumstances  where  the  constitutional 
debt  limit  was  reached  by  a  municipality  and  it  entered 
into  a  contract  to  pave  a  street  and  to  pay  in  part  and  to 
assess  the  cost  in  part  against  the  abutting  owners,  the 
contract  was  severable  and  it  was  declared  valid  as  to  the 
provision  for  the  levy  of  an  assessment  but  invalid  and 
unenforceable  in  so  far  as  the  city  agreed  to  pay  for  the 
improvement  out  of  its  general  fund."*  But  a  contract 
made  in  excess  of  the  debt  limit  for  the  purpose  of  instal- 
ling a  fire  alarm  system  does  not  admit  of  change  by  a 
court  of  equity  so  as  to  imply  a  grant  to  the  contractor  of 
a  franchise  to  opierate  it  because  the  express  contract  has 

1  McGiUivray  v.  Joint  Sch.  Dist.,  112  Wis.  354,  88  N.  W.  310. 

2  Hitchcock  V.  Galveston,  96  U.  S.  341,  24  L.  Ed.  659. 

*  Hitchcock  V.  Galveston,  supra. 

*  Ft.  Dodge  &c.  Co.  v.  Ft.  Dodge,  115  Iowa,  568,  89  N.  W.  7. 

93 


§  57  ]  THE  POWER  TO  CONTRACT         [  PART  I 

failed  for  this  reason,  especially  where  certain  of  the 
apparatus  was  provided  by  the  city,  and  the  wires  were  in 
part  strung  on  poles  owned  by  the  city.^ 

§  58.  Contract  Beyond  Powers  of  Public  Body  and  Beyond 
Scope  of  Corporate  Purposes — Receipt  of  Benefits. 
Public  bodies  cannot  be  held  liable  to  pay  for  the  bene- 
fits which  it  may  receive  under  a  contract  which  has  been 
made  by  it  in  relation  to  a  subject-matter  which  is  beyond 
the  powers  of  such  public  body  and  outside  of  the  scope  of 
the  corporate  objects  and  purposes  for  which  it  was 
created.- 

§  59.  Where  Want  of  Power  but  no  Express  Prohibition — 
Receiving  Benefits  of  Performance. 
There  seems  to  be  a  strong  current  of  authority  uphold- 
ing the  rule  that  where  a  pubUc  body  receives  the  benefits 
of  performance  under  a  contract  fully  performed  by  the 
contractor  and  which  the  pubhc  body  had  the  power  to 
make  or  which  accomplishes  some  object  or  fulfills  some 
purpose  which  is  germane  to  those  purposes  and  objects  for 
which  it  was  created,  the  pubhc  body  is  bound  to  pay  the 
reasonable  value  of  what  it  receives.^     In  like  manner, 

1  GameweU  F.  A.  T.  Co.  v.  LaPorte,  102  Fed.  417. 

2  Thomas  v.  Richmond,  12  Wall.  349;  Merrill  v.  Monticello,  138  U.  S.  673. 
34  L.  Ed.  1069;  Swanson  v.  Ottumwa,  131  Iowa,  540,  106  N.  W.  9;  Brooks  v, 
Brooklyn,  146  Iowa,  136,  124  N.  W.  868;  Hanger  v.  Des  Moines,  52  Iowa,  193, 
2  N.  W.  1105;  Newport  v.  Ry.  Co.,  58  Ark.  270,  24  S.  W.  427;  Hampton  v. 
Logan  County,  4  Idaho,  646,  43  Pac.  324;  Hovey  v.  Wyandotte  County,  56 
Kan.  577,  44  Pac.  17;  Minneapohs  Elec.  T.  Co.  v.  Minneapolis,  124  Minn. 
351,  145  N.  W.  609;  WelLs  v.  Salina,  119  N.  Y.  280,  23  N.  E.  870;  Perry  v. 
Superior,  26  Wis.  64;  NashvUle  v.  Sutherland,  92  Tenn.  335,  21  S.  W.  674; 
Murphy  v.  Jacksonville,  18  Fla.  318,  43  Am.  R.  323;  BeU  v.  Kirkland,  102 
Minn.  213,  113  N.  W.  271;  Mullan  v.  State,  114  Cal.  578,  46  Pac.  670;  New 
Decatur  v.  Berry,  90  Ala.  432,  7  So.  838;  Westminster  W.  Co.  v.  Westminster, 
98  Md.  551,  56  Atl.  990;  State  ex  rel.  St.  Paul  v.  Minn.  Trans.  Ry.  Co.,  80 
Minn.  108,  S3  N.  W.  32;  Winchester  v.  Redmond,  93  Va.  711,  52  Pac.  28. 

3  Louisiana  v.  Wood,  102  U.  S.  294,  26  L.  Ed.  153;  Parkersburg  v.  Brown, 
106  U.  S.  487,  27  L.  Ed.  238;  Chapman  v.  Douglas  County,  107  U.  S.  348,  27 

94 


€HAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  59 

where  a  contract,  which  is  ultra  vires  because  unauthorized 
merely  and  not  prohibited  by  law,  has  been  fully  performed 
by  a  municipality,  the  contractor  may  not  set  up  the  de- 
fense of  ultra  vires  but  will  be  bound  to  perform  where  he 
has  thus  received  the  benefits  of  performance  from  the 
municipality.^  So  where  a  municipaHty  loaned  money  to  a 
hotel  company  to  construct  a  hotel  receiving  as  security  for 
the  loan  a  mortgage  covering  the  hotel,  while  this  trans- 
action was  ultra  vires  yet  the  company  having  received 
the  benefits,  the  municipality  was  allowed  to  enforce  the 
mortgage  by  foreclosure  action.- 

But  there  is  authority  to  the  contrary  in  many  jurisdic- 
tions that  such  contracts  may  not  be  enforced  and  that  all 
the  municipaUty  is  entitled  to  receive  is  what  it  parted 
with  or  the  amount  of  funds  loaned,^  and  that  a  munici- 
pality will  be  estopped  to  enforce  the  performance  of  a  con- 
tract under  the  same  or  like  conditions  in  which  an  individ- 
ual will  be  estopped.''  So,  it  was  held  that  a  bond  given 
by  a  contractor  as  an  independent  undertaking  to  keep  the 
pavement  in  repair  for  a  stated  period  was  invalid  and  un- 
enforceable because  unauthorized.^ 

L.  Ed.  378;  Argenti  v.  San  Francisco,  16  Cal.  256;  Nat.  Tube  Wks.  v.  Cham- 
berlain, 5  Dak.  54,  37  N.  W.  761;  Chicago  v.  McKechney,  205  III.  372,  68 
N.  E.  954;  Schipper  v.  Aurora,  121  Ind.  154,  22  N.  E.  878;  Turner  v.  Cruzen, 
70  Iowa,  202,  30  N.  W.  483;  Brown  v.  Atchison,  39  Kan.  37,  17  Pac.  465; 
Ward  V.  Forest  Grove,  20  Oreg.  355,  25  Pac.  1020;  Schneider  v.  Menasha,  118 
Wis.  298,  95  N.  W.  94. 

1  New  York  v.  Delli  PaoU,  202  N.  Y.  18,  94  N.  E.  1077;  Mayor  v.  Sonneborn, 
113  N.  Y.  423,  21  N.  E.  121;  Buffalo  v.  Balcom,  134  N.  Y.  532,  32  N.  E.  7; 
Middleton  v.  State,  120  Ind.  166,  22  N.  E.  123;  Deering  v.  Peterson,  75  Minn. 
118,  77  N.  W.  568;  St.  Louis  v.  Davidson,  102  Mo.  149,  14  S.  W.  825;  Belfast 
V.  BeHast  Water  Co.,  115  Me.  234,  98  Atl.  738,  L.  R.  A.,  1917  B.  908;  Hender- 
sonville  v.  Price,  96  N.  C.  423,  2  S.  E.  155;  Mayor  of  Hoboken  v.  Harrison,  30 
N.  J.  L.  73. 

2  Fergus  Falls  v.  Fergus  Falls  Hotel  Co.,  80  Minn.  165,  83  N.  W.  54. 

3  Kansas  City  v.  O'Connor,  82  Mo.  App.  655;  City  of  Portland  v.  Portland 
Bituminous  Pav.  &  I.  Co.,  33  Oreg.  307,  52  Pac.  28. 

*  Portland  v.  Portland  B.  P.  &  I.  Co.,  supra. 
5  Idem. 

95 


§  59  ]  THE  POWER  TO  CONTRACT         [  PART  I 

The  reason  behind  this  last  line  of  decisions  is  simply 
that  if  the  contract  is  invahd  as  to  one  of  the  contracting 
parties,  it  is  invalid  also  as  to  the  other, ^  and  neither  may 
enforce  or  bring  suit  upon  the  contract.  Some  authorities 
ground  the  hability,  on  the  other  hand,  in  estoppel.  They 
assert  that  a  contract  made  by  a  municipality,  where  there 
exists  a  defect  of  power  or  even  a  want  of  power  to  so  con- 
tract, if  it  is  not  made  in  violation  of  charter  regulations 
or  any  statute  prohibiting  it,  is  not  illegal;  and  if  such  a 
contract  has  been  executed  and  the  benefits  received  and 
appropriated,  the  party  receiving  them  is  estopped  to  deny 
its  vaUdity.2  This  theory  also  finds  support  in  the  proposi- 
tion that  although  the  contract  is  not  authorized,  if  the 
other  party  has  been  induced  to  expend  money  on  the 
strength  of  its  vaUdity,  the  public  body  is  liable.^ 

§  60.  Where  Want  of  Power  but  no  Express  Prohibition — 
Receiving  Benefits  of  Contract — Measure  of  Re- 
covery Permitted. 
Where  a   municipahty   receives  the   benefit  of  money, 
labor    or   property   upon   a    contract   made   without   due 
formahty,   or  which   it  had  no  authority  to   make,   and 
which  it  refuses  to  execute,  it  will  nevertheless  be  liable  to 
the  person  conferring  the  benefit  to  the  extent  of  the  value 
of  what  has  been  received  and  appropriated  unless  the 
contract   was   prohibited    by   statute   or   in    violation    of 
public  poUcy.''    Public  bodies  are  not  permitted  to  acquire 
possession  of  property  under  a  contract  which  is  invalid 

» Portland  v.  Portland  B.  P.  &  I.  Co.,  supra. 

2  St.  Louis  V.  Davidson,  102  Mo.  149,  14  S.  W.  825;  State  Bd.  of  Agric.  v. 
Cits.  St.  R.  Co.,  47  Ind.  407,  17  Am.  R.  702;  Allen  v.  Lafayette,  89  Ala.  641, 
8  So.  30;  East  St.  Louis  v.  East  St.  Louis  Gas  Co.,  98  111.  415,  38  Am.  R.  97. 

^East  St.  Louis  v.  Gas  Co.,  supra;  Columbus  Water  Co.  v.  Columbus,  48 
Kan.  90  28  Pac.  1097. 

*  Schipper  v.  Aurora,  121  Ind.  154,  22  N.  E.  878. 

96 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  60 

and  plead  its  invalidity  in  support  of  a  claim  and  effort  to 
retain  the  property  in  their  possession.  Where  the  vendor 
has  acted  in  good  faith  and  without  fraud  he  will  be 
permitted  to  recover  possession  of  the  property.^  But 
where  material  has  been  used  in  the  mending  of  streets  so 
that  it  cannot  be  returned  specifically  there  arises  no 
obligation  of  any  kind,  not  even  for  reasonable  value, 
although  if  the  material  as  such  was  in  the  possession  of  the 
city  at  time  of  suit,  it  would  have  to  return  or  pay  for  it.^ 
Where  a  municipality  receives  money  under  a  contract 
of  this  character  and  the  money  is  expended  for  a  lawful 
corporate  purpose  such  as  the  laying  of  sidewalks,  the 
regulating  and  grading,  curbing  or  paving  or  other  street 
improvement,  for  water  supply  or  lighting,  for  school 
house  or  other  municipal  or  pubUc  building,  although 
bonds  issued  in  payment  of  these  may  not  be  enforceable, 
the  public  body  nevertheless  having  received  and  retained 
the  benefits  must  return  the  money  or  property  or  pay  its 
reasonable  value.  To  this  end  the  defense  of  ultra  vires 
has  been  considerably  broken  down  by  the  courts  and 
recovery  is  permitted  on  the  contract  in  some  instances  or 
estoppel  is  invoked  to  preclude  the  defense  of  ultra  vires; 
or  recovery  on  quantum  meruit  or  for  money  had  and 
received  is  permitted  to  accompUsh  what  in  justice  and 
equity  should  result. ^  The  whole  purpose  of  this  attitude 
of  the  courts  is  to  have  municipalities  obedient  to  the 
general  obligation  to  do  justice  so  that  if  they  receive 
money  which  belongs  to  another  by  mistake  or  without 

1  Chapman  v.  Douglas  County,  107  U.  S.  348,  27  L.  Ed.  378;  Bard  well  v. 
South  Engine  Wks.,  130  Ky.  222,  113  S.  W.  97,  20  L.  R.  A.,  n.  s.  110;  Stebbin 
V.  Perry  County,  167  111.  567,  47  N.  E.  1048;  LaFrance  Engine  Co.  v.  Syracuse, 
33  Misc.  516. 

2  Bartlett  v.  Lowell,  201  Mass.  151,  87  N.  E.  195. 
^  Idem. 

97 


§  60  ]  THE  POWER  TO  CONTRACT         [  PART  I 

authority  they  will  refund  it.  And  in  similar  manner  if 
they  obtain  property  which  does  not  belong  to  them, 
they  will  restore  it  or  if  they  use  it,  render  an  equivalent 
to  the  true  owner  of  such  property.^  Where  persons  part 
with  money  or  property  on  the  faith  of  a  contract  which 
is  ultra  vires,  the  courts  in  the  general  desire  to  effect 
equity  and  do  justice  will  permit  a  recovery  of  the  property 
or  the  money  specifically  or  as  money  had  and  received.^ 
Such  recovery  is  permitted  upon  the  theory  of  an  implied 
contract.^  So,  if  a  municipality  has  power  to  purchase 
land  for  a  court  house  and  does  so  by  a  contract  void 
because  the  manner  of  payment  is  forbidden,  it  neverthe- 
less will  be  required  to  convey  back  the  property  or  pay 
the  purchase  price. '^  In  like  manner  where  bonds  given  in 
aid  of  a  railroad  were  found  unauthorized  and  void  and 
all  recovery  upon  them  was  denied,  the  right  to  reclaim 
the  capital  stock  held  by  the  county  as  consideration  for 
the  issue  of  the  bonds  will  be  sustained.'^  Where,  however, 
the  money  did  not  go  into  the  treasury  of  the  municipality 
and  it  received  no  part  of  the  proceeds  of  the  bonds,  but 
instead  it  was  paid  directly  by  the  lender  to  a  railroad 
company  in  exchange  for  the  bonds  of  the  municipality 
issued  to  the  railroad  without  authority  so  that  the  con- 
tract was  ultra  vires,  and  the  benefits  which  the  munic- 
ipality received  were  only  the  general  benefits  conferred 
on   all   alike   from   the   construction  of    the   railroad,  no 

'  Argenti  v.  San  Francisco,  16  Cal.  256;  Allen  v.  LaFayette,  89  Ala.  641,  8 
So.  30.    But  see  Bartlett  v.  Lowell,  cited  supra. 

2  Allen  V.  LaFavette,  supra;  Pimental  v.  San  Francisco,  21  Cal.  362;  Clark 
V.  SaUne  County,  9  Neb.  516,  4  N.  W.  246;  Marsh  v.  Fulton  County,  77  U.  S. 
676,  19  L.  Ed.  1040;  Louisiana  v.  Wood,  102  U.  S.  294,  26  L.  Ed.  153;  Chapman 
V.  Douglas  County,  107  U.  S.  348,  27  L.  Ed.  378;  Salt  Lake  City  v.  Hollister, 
118  U.  S.  256,  30  L.  Ed.  176,  aff'g  3  Utah,  200,  2  Pac.  200. 

*  Argenti  v.  San  Francisco,  16  Cal.  256;  Allen  v.  LaFayette,  supra. 

*  Chapman  v.  Douglas  County,  supra. 
5  Stebbins  v.  Perry  County,  supra. 

98 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  62 

implied  obligation  would  arise  against  the  municipality  to 
repay  the  proceeds  of  the  bonds.  ^ 

§  61.  Defective  Execution. 

If  a  municipality  or  other  public  body  has  power  and 
authority  to  make  a  contract  with  reference  to  a  given 
subject-matter,  but  the  contract  becomes  invalid  because 
the  power  granted  is  defectively  or  irregularly  exercised, 
and  the  performance  of  the  contract  has  been  effected  in 
good  faith  by  the  contractor,  the  public  body  is  Hable  on 
the  contract,  unless  the  contract  was  prohibited  by  law  or 
in  violation  of  public  pohcy.^  On  the  other  hand,  some 
jurisdictions  only  uphold  a  liability  by  the  municipahty 
to  the  person  conferring  the  benefit  to  the  extent  of  the 
value  of  what  has  been  received  and  appropriated,  and 
therefore  admit  a  recovery  not  upon  the  contract  but  upon 
quantum  meruit.^ 

§  62.  Making  Contract  Valid  in  Substance  but  Invalid  in 
Extent  of  Exercise  of  Power. 

Where  a  contract  proves  invalid  in  part  because  of  an 

1  Traveler  Ins.  Co.  v.  Johnson  City,  99  Fed.  663,  49  L.  R.  A.  123. 

2  Chapman  v.  Douglas  County,  107  U.  S.  348,  27  L.  Ed.  378;  Hitchcock  v. 
Galveston,  96  U.  S.  341,  24  L.  Ed.  659;  Drainage  Commrs.  v.  Lewis,  101  III. 
App.  150;  Argenti  v.  San  Francisco,  16  Cal.  256;  Sanitary  Dist.  v.  Blake  Mfg. 
Co.,  179  111.  167,  63  N.  E.  627;  Mound  City  v.  Snoddy,  53  Kan.  126,  35  Pac. 
1112;  State  v.  Moore,  46  Neb.  590,  65  N.  W.  193;  State  v.  Long  Branch,  59 
N.  J.  L.  371,  35  Atl.  1070;  Portland,  etc.,  Co.  v.  East  Portland,  18  Oreg.  21,  22 
Pac.  536;  McGuire  v.  Rapid  City,  6  Dak.  346,  43  N.  W.  706;  Nat.  Tube  Wks. 
V.  Chamberlain,  5  Dak.  54,  37  N.  W.  761;  Bell  v.  Ku-kland,  102  Minn.  213,  113 
N.  W.  271;  Laird  Norton  Yds.  v.  Rochester,  117  Minn.  114,  134  N.  W.  644; 
First  Nat.  Bk.  v.  Goodhue,  120  Minn.  362,  139  N.  W.  599;  Saleno  v.  Neosho, 
127  Mo.  627,  30  S.  W.  190;  Moore  v.  New  York,  73  N.  Y.  238,  29  Am.  R.  134; 
Portland  v.  Portland  Bitum.  Pav.  &  I.  Co.,  33  Oreg.  307,  52  Pac.  28;  Long  v. 
LeMoyne,  222  Pa.  St.  311,  71  Atl.  211. 

3  Schipper  v.  Aurora,  121  Ind.  154,  22  N.  E.  878;  Bluthenthal  v.  Headland, 
132  Ala.  249,  31  So.  87;  State  ex  rel.  Morris  v.  Clark,  116  Minn.  500,  134  N.  W. 
130;  Kramrath  v.  Albany,  127  N.  Y.  575,  28  N.  E.  400;  Carey  v.  East  Saginaw, 
79  Mich.  73,  44  N.  W.  168;  Ellsworth  v.  Rossiter,  46  Kan.  237,  26  Pac.  674; 
Lincoln  Land  Co.  v.  Grant,  57  Neb.  70,  77  N.  W.  349. 

99 


§  62  ]  THE   POWER  TO   CONTRACT  [  PART  I 

attempt  to  grant  an  exclusive  franchise  to  a  public  service 
corporation  to  use  the  city  streets  after  the  contract  has 
been  substantially  performed  by  the  corporation,  after  its 
plant  had  been  constructed  according  to  its  terms,  and 
after  the  city  had  accepted  and  used  it  for  years,  and  had 
secured  the  benefits  of  the  grant,  it  may  not  repudiate  all 
the  obligations  it  had  the  power  to  assume,  because  it 
assumed  one  that  was  beyond  its  power.  The  grant  of 
such  exclusive  privilege  is  merely  ultra  vires  and  not 
inmioral  or  illegal.  There  is  therefore  no  rule  of  law  or  of 
morals  which  will  reheve  the  recipient  of  the  substantial 
benefits  of  a  partially  executed  contract  from  the  obliga- 
tion to  perform  or  to  pay,  because  the  performance  of  an 
insignificant  portion  of  it  is  beyond  the  powers  of  the 
public  body.  The  true  rule  is  that  when  a  part  of  a 
divisible  contract  is  ultra  vires,  but  neither  malum  in  se 
nor  malum  prohibitum,  the  remainder  may  be  enforced, 
unless  it  appears  from  a  consideration  of  the  whole  con- 
tract that  it  would  not  have  been  made  independently  of 
the  part  which  is  void.^ 

§  63.  Want  of  Power  to  Enter  into  Contract — Equitable 
Relief. 

If  a  public  contract  has  been  entered  into  in  good  faith 
between  a  public  corporation  and  a  contractor,  and  the 
contract  is  partially  or  wholly  void  because  of  want  of 
power  to  make  it,  or  make  it  in  the  manner  it  was  made, 
and  the  contract  is  not  immoral,  inequitable  or  unjust, 
and  the  contract  is  performed  in  whole  or  in  part  by  one  of 
the  parties,  and  the  other  party  receives  the  benefits  of 

'  Illinois  Trust  &  Savings  Bk.  v.  Arkansas  City,  76  Fed.  271;  Saginaw  Gas 
Light  Co.  V.  Saginaw,  28  Fed.  529,  540;  Reagan  v.  Farmers  L.  &  T.  Co.,  154 
U.  S.  362,  395,  38  L.  Ed.  1014;  Mobile  Elec.  Co.  v.  Mobile,  201  Ala.  607,  79 
So.  39,  L.  R.  A.,  1918  F.  667. 

100 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  65 

such  performance,  which  the  contractor  may  lawfully  give 
and  the  public  body  lawfully  receive,  the  party  receiving 
the  benefits  will  be  required  to  do  equity  towards  the 
other  party  by  either  rescinding  the  contract,  and  placing 
the  other  party  in  statu  quo  or  by  accounting  to  the  other 
party  for  all  benefits  received  for  which  no  equivalent  has 
been  rendered  in  return,  and  all  this  will  be  done  as  nearly 
in  accordance  with  the  terms  of  the  contract  as  law  and 
equity  will  permit.^ 

But  of  course,  the  rule  in  equity  can  be  no  different 
than  that  which  prevails  at  law  where  there  is  not  a  mere 
irregularity  in  letting  the  contract  or  where  the  contract 
let  is  not  merely  unauthorized  but  where  it  is  let  in  viola- 
tion of  law  and  is  utterly  and  jurisdictionally  illegal. 

§  64.  Illegal  Contract — Relief  in  Equity — Cancellation. 

Where  a  public  body  seeks  rehef  in  equity  from  an  ultra 
vires  contract,  if  the  consideration  received  by  it  can  be 
restored,  a  court  of  equity  will  not  relieve  the  public  body 
therefrom,  without  providing  for  a  restoration  of  the  con- 
sideration.^ 

§  65.  Illegality — Ratification — Waiver. 

Where  action  is  brought  upon  a  contract  which  is 
illegal,  no  recovery  may  be  had  upon  the  theory  that  the 
acts  have  been  ratified,  for  there  can  be  no  ratification  of  a 
contract  which  is  illegal  as  distinguished  from  one  which 
is   merely   unauthorized.^     And   whether   the   defense   of 

1  Brown  v.  Atchison,  39  Kan.  37,  17  Pac.  465,  7  Am.  St.  R.  515. 

2  Turner  v.  Cruzen,  70  Iowa,  202,  30  N.  W.  483;  Moore  v.  New  York,  73 
N.  Y.  238,  29  Am.  R.  134;  Argenti  v.  San  Francisco,  16  Cal.  256;  Lucas  Co.  v. 
Hunt,  5  Ohio  St.  488;  see  Coker  v.  Atlanta  K.  &  N.  R.  Co.,  123  Ga.  483,  51 
o   TT   481 

3  U.  S.  V.  Grossmayer,  9  Wall.  (U.  S.)  72,  19  L.  Ed.  627;  Lancaster  County 
V.  Fulton,  128  Pa.  48,  18  Atl.  384;  Ft.  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E. 
973. 

101 


§  65  ]  THE   POWER   TO    CONTRACT  [  PART  I 

illegality  is  pleaded  or  not,  if  the  facts  develop  it,  the 
court  will  not  enforce  the  contract  but  will  of  its  own 
motion  take  notice  of  its  illegality,  its  corruption  or 
iniinorahty.^  The  defense  of  illegaUty  may  not  be 
waived  by  the  officers  of  a  public  body  -  and  where  the 
Constitution  denies  recovery  on  illegal  contracts,  not 
even  the  legislature  may  waive  the  illegality.^  Even 
contracts  which  are  permitted  by  the  laws  of  other 
countries  are  not  enforceable  in  the  courts  of  this 
country,  if  they  contravene  our  laws,  our  morality  or 
our  policy.* 

So  a  contract  to  bribe  or  corruptly  influence  officers  of 
a  foreign  government  will  not  be  enforced  in  the  courts 
of  this  country,  not  on  account  of  regard  for  the  interests 
or  pohcy  of  such  government  but  because  the  transaction 
is  inherently  vicious,  is  repugnant  to  our  code  of  morality 
and  because  of  the  pernicious  effect  which  its  enforcement 
would  have  upon  our  own  people.^ 

While  no  sort  of  ratification  can  make  good  an  act, 
outside  the  scope  of  corporate  authority,  if  a  public  body 
with  full  knowledge  of  the  facts  ratifies  the  doings  of  one 
who  has  assumed  to  act  in  its  behalf  it  will  be  bound 
thereby  and  the  ratification  will  make  the  contract  as 
effectual  as  if  the  acts  had  been  originally  authorized  by 
express  resolution  of  the  public  body.^  The  ratification 
may  be  by  express  assent  or  by  acts  or  conduct  incon- 
sistent with  any  other  supposition  than  that  the  pubhc 

1  Oscanyan  v.  Arms  Co.,  103  U.  S.  261,  26  L.  Ed.  539;  Nelson  v.  Mayor,  131 
N.  Y.  4,  29  N.  E.  814. 

2  Northport  v.  Northport  Towneite  Co.,  27  Wash.  543,  68  Pac.  204. 

3  Norbeck  &  N.  Co.  v.  State,  32  S.  D.  189,  142  N.  W.  847. 
*  Oscanyan  v.  Arms  Co.,  supra. 

^  Idem. 

9  Peterson  v.  Mayor,  17  N.  Y.  449;  Albany  City  Nat'l  Bk.  v.  Albany,  92 
N.  Y.  363. 

102 


CHAP.  XI  ]  ULTRA  VIRES   CONTRACTS  [  §  66 

body  intended  to  adopt  the  act  done  in  its  behalf.^  There 
must  be  full  knowledge  of  all  material  facts  in  order  to 
bind  a  public  body  by  ratification. 

But  the  rule  that  in  order  to  bind  a  public  body  by 
ratification  it  must  have  knowledge  of  all  material  facts 
has  no  application,  where  its  own  records  are  in  concern 
and  it  is  chargeable  with  such  knowledge,  and  a  mere 
change  in  the  individuals  who  constitute  such  body  does 
not  destroy  its  continuity  or  relieve  it  from  the  presump- 
tion of  knowledge  of  the  official  acts  of  record  performed 
by  its  predecessors.^ 

§66.  Estoppel. 

The  doctrine  of  estoppel  in  pais  applies  to  municipal 
corporations  as  well  as  to  private  corporations,  but  the 
public  will  only  be  estopped  or  not  as  justice  and  right 
require.  Any  positive  acts  by  municipal  officers  which 
may  have  induced  the  action  of  the  adverse  party,  and 
where  it  would  be  inequitable  to  permit  the  public  body 
to  stultify  itself  by  retracting  what  its  officers  may  have 
done,  will  work  an  estoppel.^  A  city  is  accordingly 
estopped  from  recovering  a  penalty  from  a  person  for 
pursuing  a  lawful  trade  or  calling  for  the  privilege  of 
which  it  has  received  and  retains  the  license  fee  exacted 
of  him,  even  though  it  was  paid  to  one  not  a  de  jure  officer, 
as  long  as  the  city  retains  it  with  knowledge  of  the  purpose 
for  which  it  was  paid.^  A  city  is  bound  in  justice  and 
equity  to  repay  the  unearned  portion  of  a  license  fee  paid 
for  the  conduct  of  a  privilege  in  the  community  where 

1  Albany  City  Nat.  Bk.  v.  Albany,  supra. 

2  Idem. 

»  Martel  v.  E.  St.  Louis,  94  lU.  67. 
*  Idem. 

103 


§  66  ]  THE  POWER  TO  CONTRACT         [  PART  I 

the   privilege   is   revoked   before   the   term   paid   for   has 
expired.^ 

But  courts  will  not  compel  a  municipahty  to  restore 
money  paid  for  a  license  to  carry  on  a  business  prohibited 
by  a  penal  statute  or  against  public  pohcy,  since  it  is  a 
general  rule  that  no  action  may  be  maintained  to  recover 
moneys  or  property  lost,  or  damages  sustained  through 
transactions  or  contracts  wherein  the  suitor  is  guilty  of  moral 
turpitude  or  which  arise  out  of  his  violation  of  a  general 
law — enacted  to  carry  into  effect  the  pubhc  pohcy  of  a  State 
or  Nation.  If  a  municipality  makes  an  ultra  vires  contract 
to  authorize  a  business  forbidden  by  general  law  and  then 
repudiates  it,  no  recovery  of  any  fee  paid  is  permissible.^ 

§  67.  Voluntary  Payment — Recovery  Back  by  Public  Body 
of  Money  Paid  Under  an  Illegal  Contract. 

If  the  agent  of  a  public  body  pays  out  its  money  with- 
out power  and  authority  under  an  illegal  contract  such 
money  is  recoverable  back.  The  doctrine  of  voluntary 
payment  cannot  be  invoked  by  the  payee  to  retain  the 
money  illegally  paid  to  him.  That  doctrine  cannot  apply 
to  the  agent  of  a  public  corporation,  who  pays  its  money 
out  without  power,  to  one  who  accepts  it  with  full  knowl- 
edge. Such  action  is  void,  and  a  void  payment  is  no 
payment.  It  is  not,  therefore,  a  payment  voluntarily 
made  by  the  corporation,  but  by  its  agent  in  excess  of  his 
authority.  Accordingly  it  is  not  the  act  of  the  pubhc  body 
but  of  one,  who  assumes  to  act  for  it,  without  authority. 
An  action  will  therefore  he  at  the  suit  of  the  public  body 
to  recover  back  the  moneys  paid.^ 

1  Pearson  v.  Seattle,  14  Wash.  438,  44  Pac.  884;  State  v.  Cornwell,  12  Neb. 
470,  11  N.  W.  729. 

2  Levy  V.  Kansas  City,  168  Fed.  524. 

'  Ft.  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E.  973;  Bd.  of  Supervisors  v.  Ellis, 

104 


CHAP.  XI  ]  ULTRA   VIRES   CONTRACTS  [  §  67 

Where  a  contract  provides  that  no  payment  shall  be 
made  for  certain  classes  of  work,  if  the  pubUc  body  makes 
payment  therefor,  it  will  not  be  considered  as  irrevocable 
or  as  paid  mider  a  mistake  of  law.  Such  money  must  be 
regarded  as  paid  for  work  done  under  the  contract,  the 
only  purpose  for  which  it  may  lawfully  be  paid.  If  paid, 
it  will  be  regarded  as  nothing  more  than  an  overpayment, 
which  may  properly  be  deducted  from  whatever  sum  was 
due  the  contractor  for  any  portion  of  the  work.^  Where 
the  public  body  or  its  officers  fail  to  perform  their  duty  to 
sue  for  recovery  of  the  money,  an  action  may  be  brought 
by  a  taxpayer  for  such  purpose. 

59  N.  Y.  620;  Ward  v.  Bamum,  10  Colo.  App.  496,  52  Pac.  412;  Wayne  Co.  v. 
Reynolds,  126  Mich.  231,  85  N.  W.  574;  Bayne  v.  U.  S.,  93  U.  S.  642,  23  L.  Ed. 
997;  Cayuga  County  v.  State  (N.  Y.  Ct.  CI.),  183  N.  Y.  Supp.  646. 
1  Chicago  t'.  Weir,  165  lU.  582,  46  N.  E.  725. 


105 


CHAPTER  XII 

EXERCISE    OF   PARTICULAR   POWERS 

§  68.  Water  and  Lighting. 

It  would  seem  that  such  an  essential  to  a  community  as 
water  would  readily  lay  a  foundation  to  imply  a  power  to 
procure  it  from  the  grant  of  general  powers  such  as  the 
welfare  clause  common  to  municipal  charters.  But  the 
courts  have  in  many  jurisdictions  determined  that  the 
procuring  of  water  is  a  matter  of  concern  for  the  individual, 
and  the  community  is  without  power  to  supply  it  except 
by  express  grant.  ^  If  water  were  used  merely  for  drinking 
purposes  such  a  conclusion  might  not  be  questioned,  but 
even  for  such  a  purpose  in  the  interest  of  the  general 
health  nothing  could  be  so  essential  as  a  sufficient  supply 
of  wholesome  and  pure  water.  But  its  uses  for  fire  and 
general  sanitation  of  the  streets  and  houses  of  a  com- 
munity make  it  an  absolute  need  in  our  complex  city 
civilization  of  to-day.  In  like  manner,  the  implied  power 
to  fight  streets  has  been  denied.^  Lighted  streets  uncover 
the  lurking  highwayman  and  destroy  the  opportunity  for 
immorality  under  cover  of  darkness  in  public  places. 
These  purposes  relate  intimately  to  the  personal  security 
and  the  moral  welfare  of  the  citizen  and  should  afford 
substantial  ground  for  the  courts  to  infer  the  power  to 
light  streets  from  general  powers  granted  to  a  community. 

1  Wichita  Water  Co.  v.  Wichita,  234  Fed.  415;  Huron  Water  Works  Co.  v. 
Huron,  7  S.  D.  9,  62  N.  W.  975. 

2  Posey  V.  North  Birmingham,  154  Ala.  511,  45  So.  663. 

106 


CHAP.  XII  ]        EXERCISE    OF   POLITICAL   POWERS  [  §  68 

However,  in  other  jurisdictions  the  supplying  of  water  and 
the  hghting  of  streets  has  been  determined  to  be  one  of 
the  fundamental  grants  of  power  which  would  be  implied 
from  its  creation  and  existence  and  a  necessary  incident 
thereto,^  Such  power  will  be  implied  even  though  not 
expressly  conferred,  since  the  use  of  the  power  is  necessary 
to  fully  protect  the  lives,  comfort,  security  and  property  of 
the  inhabitants.^  A  grant  of  power  to  provide  a  water 
supply  carries  with  it  by  implication  the  power  to  con- 
tract with  private  persons  or  corporations  to  supply 
water.  ^  Public  bodies  which  enter  into  contracts  with 
private  water  companies  for  such  a  supply  under  express 
statutory  authorization  are  not  precluded  from  obtaining  a 
supply  from  other  sources.  The  mere  fact  that  a  pubhc 
body  consents  to  the  incorporation  of  a  company  to  supply 
water  and  to  use  its  streets  for  that  purpose  and  subse- 
quently enters  into  a  contract  with  such  company  for  a 
supply  will  not  constitute  the  franchise  which  the  company 
obtains  exclusive  or  bind  the  public  body  to  obtain  water 
exclusively  from  it.  Such  facts  will  not  create  a  grant  of 
a  right  to  supply  water  exclusive  in  its  nature,^  as  legisla- 
tive grants  will  not  be  extended  by  implication  but  on  the 
contrary  are  construed  strictly  in  favor  of  the  public.^ 
Except  so  far  as  the  privileges  granted  are  exclusive  under 
the  terms  of  a  grant,  the  power  is  reserved  to  grant  and 
permit  the  exercise  of  competitive  grants  no  matter  how 

1  State  ex  rel.  Ellis  v.  Tampa  W.  Wks.  Co.,56  Fla.  858,  47  So.  358;  Fawcett  v. 
Mt.  Airy,  134  N.  C.  125,  45  S.  E.  1029. 

2  Lott  V.  Waycross,  84  Ga.  681,  11  S.  E.  558;  Crawfordsville  v.  Braden,  130 
Ind.  149,  28  N.  E.  849;  Opinion  of  Justices,  150  Mass.  592,  24  N.  E.  1084; 
ElUnwood  V.  Reedsburg,  91  Wis.  131,  64  N.  W.  885. 

3  Reed  v.  Anoka,  85  Minn.  294,  88  N.  W.  981. 

^Syracuse  W.  Co.  v.  Syracuse,  116  N.  Y.  167,  22  N.  E.  381;  Re  Brooklyn, 
143  N.  Y.  596,  38  N.  E.  983,  26  L.  R.  A.  270. 

6  Re  Brooklyn,  143  N.  Y.  596,  26  L.  R.  A.  270;  Syracuse  Water  Co.  v.  Syra- 
cuse, 116  N.  Y.  167,  22  N.  E.  381. 

107 


§  68  ]  THE  POWER  TO  CONTRACT         [  PART  I 

injurious  they  may  be  to  those  taken  by  the  eariier  gran- 
tee.^ And  in  determining  the  extent  of  the  grant  reference 
can  only  be  had  to  the  terms  of  the  grant  itself.^  Where 
the  legislature  has  provided  that  a  city  might  condemn, 
if  it  chose  to  buy,  the  plant  of  a  public  service  company 
such  statute  would  conditionally  protect  the  company 
during  the  life  of  the  statute  from  municipal  competition, 
but  such  statute  cannot  operate  to  enlarge  the  original 
franchise,  nor  grant  any  new  franchise.  It  constitutes  no 
agreement  with  the  company  and  it  is  entirely  competent 
for  the  legislature  subsequently  to  repeal  the  statute  and 
leave  the  city  free  to  compete.^  In  hke  manner,  where 
authority  was  given  to  a  town  to  light  its  streets  and  it 
made  a  contract  with  a  company  for  five  years  to  furnish 
light  and  the  legislature  repealed  the  act  in  the  year 
following  its  passage,  the  service  company  could  not  re- 
cover from  the  town.  Since  the  town  had  no  authority 
to  make  a  continuing  contract,  it  could  not  bind  the 
legislature  not  to  repeal.'*  Simply  because  a  legislature 
passes  an  act  which  empowers  municipalities  to  deal  with 
public  utility  corporations  formed  under  the  act,  is  not 
evidence  that  the  legislature  intended  to  comp)el  public 
bodies  to  deal  with  these  corporations  against  their  will. 
It  is  the  concern  of  municipal  authorities  to  light  their 
streets  by  the  cheapest  means  attainable,  and  they  must 
have  discretion  in  determining  the  merits  and  reliability 
of  the  means  of  reaching  that  result.     So  it  may  make 

1  Syracuse  W.  Co.  v.  Syracuse,  supra;  Andrews  v.  South  Haven,  187  Mich. 
294,  153  N.  W.  827,  L.  R.  A.,  1916  A.  908;  Re  Brooklyn,  supra;  Knoxville  W. 
Co.  V.  Knoxville,  200  U.  S.  22,  50  L.  Ed.  353;  United  R.  Co.  v.  San  Francisco, 
249  U.  S.  517,  63  L.  Ed.  739. 

2  Halstead  v.  New  York,  3  N.  Y.  433;  S3Tacuse  W.  Co.  v.  Syracuse,  supra. 
'  Re  Brooklyn,  supra. 

*  Richmond  Co.  G.  Co.  v.  Middletown,  59  N.  Y.  228;  Contra,  Cits.  Water 
Co.  V.  Bridgeport  Hyd.  Co.,  55  Conn.  1,  10  Atl.  170. 

108 


CHAP.  XTI  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  68 

contracts  with  individuals  as  well  as  with  the  corporations 
organized.  ^  ! 

Where  the  power  is  granted,  the  means  to  carry  out  the 
power  is  left  to  the  discretion  of  the  public  body.  It 
may  erect  its  own  plant  or  may  contract  for  a  supply. - 
And  it  may  supply  its  inhabitants  as  an  incident  to  the 
power  granted.^  But  in  some  jurisdictions,  it  has  been 
declared  that  the  public  body  may  not  erect  a  municipal 
plant  under  a  grant  of  power  to  light  streets.^  Without 
express  power,  it  cannot  give  an  exclusive  franchise  to  a 
private  company  to  furnish  water  or  to  light  the  streets 
or  furnish  a  supply  to  the  inhabitants.^  Nor  may  it 
grant  a  perpetual  franchise,®  nor  agree  to  pay  annually 
in  perpetuity  to  a  company  supplying  it  with  water  a  sum 
equal  to  a  certain  amount  on  the  present  assessed  valua- 
tion of  its  property.^  But  a  municipality  has  the  power 
to  make  a  contract  with  a  water  company  for  a  water 
supply  and  provide  as  one  of  the  terms  of  compensation 
that  a  sum  equal  to  a  portion  of  the  taxes  for  each  year 
shall  be  allowed  in  addition  to  payment  of  a  definite  sum 
for  water  supplied.^    Such  a  provision  is  not  an  exemption 

»  Cits.  Elec.  L.  Co.  v.  Sands,  95  Mich.  551,  20  L.  R.  A.  411;  State  v.  Tampa 
W.  Wks.  Co.,  56  Fla.  858,  47  So.  358. 

2  Middleton  v.  St.  Augustine,  42  Fla.  287,  29  So.  421;  Overall  v.  Madison- 
ville,  31  Ky.  L.  R.  278,  102  S.  W.  278;  Fawcett  v.  Mt.  Airy,  134  N.  C.  125, 
45  S.  E.  1029,  63  L.  R.  A.  870;  Oakes  Mfg.  Co.  v.  New  York,  206  N.  Y.  221, 
99  N.  E.  540,  42  L.  R.  A.,  n.  8.  286. 

3  Crawfordsville  v.  Braden,  130  Ind.  149,  28  N.  E.  849;  Middleton  v.  St. 
Augustine,  supra;  Overall  v.  Madisonville,  supra;  Contra,  Hyatt  v.  Williams, 
148  Cal.  585,  84  Pac.  41;  Christensen  t;.  Fremont,  45  Neb.  160,  63  N.  W.  364. 

^Spaulding  v.  Feabody,  153  Mass.  129,  26  N.  E.  421;  HoweU  v.  Millville, 
60  N.  J.  L.  95,  36  Atl.  691. 

6  Altgelt  t;.  San  Antonio,  81  Tex.  436,  17  S.  W.  75;  lU.  Trust  &  Sav.  Bk.  v. 
Arkansas  City,  76  Fed.  271. 

fl  Westminster  W.  Co.  v.  Westminster,  98  Md.  551,  56  Atl.  990. 

^  Idem. 

8  Utica  Water  Works  Co.  v.  Utica,  31  Hun,  426;  Maine  Water  Co.  v.  Water- 
ville,  93  Me.  586,  45  Atl.  830;  Ludington  W.  S.  Co.  v.  Ludington,  119  Mich. 
480,  78  N.  W.  558. 

109 


§  68  ]  THE  POWER  TO  CONTRACT         [  PART  I 

from  taxation.  Its  effect  is  not  to  relieve  the  company 
from  the  payment  of  taxes,  but  it  is  to  adopt  the  amount 
of  taxes  paid  by  the  company  as  a  partial  measure  of 
compensation.^  The  power  to  provide  water  carries  with 
it  the  power  to  supply  ice,  as  one  is  but  the  other  in 
frozen  condition. - 

Alunicipahties  have  no  duty  to  supply  other  municipal- 
ities or  non-residents  with  water.  It  is  declared  that  if 
the  plant  as  constructed  for  itself  affords  opportunity  to 
sell  its  surplus  to  others  it  has  the  right  to  do  so,  but 
cannot  extend  its  plant  outside  its  limits  for  this  purpose.^ 
It  has  the  right  to  terminate  its  contract  at  any  time 
upon  reasonable  notice.^  Power  to  contract  to  supply 
water  confers  no  power  to  contract  to  supply  another  city 
therewith.^  Under  a  power  to  supply  water  to  its  inhab- 
itants there  arises  no  implied  power  to  contract  to  furnish 
water  for  fifty  years  at  a  nominal  rate  to  induce  a  public 
institution  to  locate  within  the  limits  of  the  municipality.® 

When  a  municipal  corporation  engages  in  the  business  of 
supplying  water  to  its  inhabitants  it  is  engaged  in  an 
undertaking  of  a  private  nature.'     The  enterprise  is  one 

1  Idem. 

2  Holton  V.  Camilla,  134  Ga.  560,  68  S.  E.  472. 

«  Childs  V.  Columbia,  87  S.  C.  566,  70  S.  E.  296;  Dyer  v.  Newport,  123  Ky. 
203,  94  S.  W.  25;  Lawrence  v.  Methuen,  166  Mass.  206,  44  N.  E.  247;  Contra, 
FarweU  v.  Seattle,  43  Wash.  141,  86  Pac.  217. 

*  Childs  V.  Columbia,  supra. 

s  RehiU  v.  Jersey  City,  71  N.  J.  L.  109,  58  Atl.  175. 

'Eastern  111.  St.  Normal  School  v.  Charleston,  271  111.  602,  111  N.  E.  573. 

7  Piper  V.  Madison,  140  Wis.  311,  122  N.  W.  730,  25  L.  R.  A.  n.  s.  239,  133 
Am.  St.  Rep.  1078;  People  ex  rel.  Park  Comrs.  v.  Detroit,  28  Mich.  229,  15 
Am.  Rep.  202;  Aldrich  v.  Tripp,  11  R.  I.  141,  23  Am.  Rep.  434;  Judson  v. 
Winsted,  80  Conn.  384,  68  Atl.  999,  15  L.  R.  A.  n.  s.  91;  Wagner  v.  Rock 
Island,  146  lU.  139,  34  N.  E.  545,  21  L.  R.  A.  519;  Esberg  Cigar  Co.  v.  Port- 
land, 34  Or.  282,  55  Pac.  961,  43  L.  R.  A.  435,  75  Am.  St.  Rep.  651;  Brown  v. 
Salt  Lake  City,  33  Utah,  222,  93  Pac.  570,  14  L.  R.  A.  n.  s.  619,  126  Am.  St. 
Rep.  828,  14  Ann.  Cas.  1004;  Hourigan  v.  Norwich,  77  Conn.  358,  59  Atl. 
487,  17  Am.  Neg.  Rep.  445;  L>Tich  v.  Springfield,  174  Mass.  430,  54  N.  E. 
871;  Philadelphia  v.  Gilmartin,  71  Pa.  St.  140;  Asher  v.  Hutchinson  Water 

110 


CHAP.  XII  ]         EXERCISE    OF   POLITICAL   POWERS  [  §  69 

which  involves  the  ordinary  incidents  of  a  business  wherein 
something  is  sold  which  people  desire  to  buy  and  which 
may  become  profitable.  Under  these  circumstances  a 
municipality  becomes  liable  for  the  breach  of  its  contract 
or  for  neghgence  just  as  a  proprietor  of  a  private  business 
might  become.^  There  is  no  implied  warranty  that  water 
is  wholesome.  2  A  municipality,  however,  acts  in  a  govern- 
mental capacity  and  discharges  a  governmental  function 
when  it  furnishes  water  to  its  own  Fire  Department,  and 
when  so  acting  in  a  governmental  capacity,  of  course  is 
not  liable.^  In  the  absence  of  an  express  agreement  to 
pay  for  water  an  implied  contract  will  arise,  where  a 
consumer  actually  uses  the  water.  ^ 

§  69.  Contracts  Relating  to  Sanitation. 

While  the  powers  of  poUtical  subdivisions  to  contract 
cannot  be  extended  by  intendment  or  imphcation  beyond 
the  terms  of  the  express  grant  of  powers  or  those  which  are 
a  necessary  incident  to  carry  out  the  express  powers,  there 
is  nevertheless  included  as  incidental  to  their  ordinary 
powers,  the  power  of  self-preservation,  and  the  means  to 
carry  out  the  essential  purposes  and  objects  of  their  exist- 
ence. 

One  of  the  powers  necessary  to  preserve  society  and  to 
properly  exercise  the  functions  of  local  government  is  the 

Light  &  P.  Co.,  66  Kan.  496,  71  Pac.  813,  61  L.  R.  A.  52;  Keever  v.  Mankato, 
113  Minn.  55,  129  N.  W.  158,  775,  33  L.  R.  A.  n.  s.  339,  Ann.  Cas.  1912  A. 
216;  Oake3  Mfg.  Co.  v.  New  York,  206  N.  Y.  221  99  N.  E.540,  42  L.  R.  A. 
N.  s.  286. 

1  Oakes  Mfg.  Co.  v.  New  York,  supra;  Stock  v.  Boston,  149  Mass.  410,  21 
N.  E.  871;  Watson  v.  Needham,  161  Mass.  404,  37  N.  E.  204,  24  L.  R.  A.  287; 
MUnes  v.  Huddersfield,  L,  R.  13,  2  B.  D.  443;  Lynch  v.  Springfield,  174  Mass. 
430,  54  N.  E.  871. 

2  Canavan  v.  Mechanicsville,  229  N.  Y.  473,  128  N.  E.  882. 

3  Springfield  F.  &  M.  Co.  v.  KeeseviUe,  148  N.  Y.  48,  42  N.  E.  405. 
*  Woodward  v.  Livermore  Falls  Water  Dist.,  100  Atl.  (Me.)  317. 

Ill 


§  69  ]  THE   POWER  TO   CONTRACT  [  PART  I 

power  to  enact  sanitative  regulations  for  the  preservation 
of  the  health  and  the  hves  of  its  inhabitants/  and  to  make 
necessary  contracts  to  fulfill  such  a  purpose;  -  and  exclusive 
contracts  granting  a  monopoly  to  the  contractor  for  the 
removal  of  offensive  products,  objects  and  things  danger- 
ous to  the  health  of  the  community  have  been  sustained  as 
entirely  vaUd.^  The  reason  for  the  rule  is  to  be  found  in 
this  that  the  removal  of  noxious  and  unwholesome  matter 
tends  directly  to  promote  the  public  health,  comfort  and 
welfare  and  is,  therefore,  a  proper  exercise  of  the  police 
power;  and  the  privileges  granted  although  exclusive  are 
therefore  an  incident  to  the  proper  exercise  of  the  police 
power  of  the  State.*  The  legislative  power  cannot,  how- 
ever, under  the  guise  of  poUce  regulations  arbitrarily  in- 
vade personal  rights  and  private  property  unless  these 
have  in  fact  some  relation  to  the  public  health  or  public 
welfare  and  such  is  the  end  sought  to  be  attained  thereby.^ 
General  power  under  a  charter  to  make  regulations  for  the 
promotion  of  health  and  the  suppression  of  disease  will  not 
confer  upon  a  municipaUty  power  to  give  an  exclusive 
privilege  to  one  contractor  who  will  pay  for  it  with  the 
effect  of  destroying  the  legitimate  business  of  many  others.^ 
And  under  the  guise  of  such  regulations  the  public  body 
may  not  deprive  the  owners  of  their  property.^ 

1  St.  Paul  V.  Laidler,  2  Minn.  190. 

2  Smiley  v.  McDonald,  42  Neb.  5,  60  N.  W.  355;  Alpers  v.  San  Francisco, 
32  Fed.  503;  Walker  v.  Jameson,  140  Ind.  591,  37  N.  E.  402,  39  N.  E.  869. 

»  Rochester  v.  Gutberlett,  211  N.  Y.  309,  105  N.  E.  548;  Smiley  v.  McDonald, 
42  Neb.  5,  60  N.  W.  355;  Alpers  v.  San  Francisco,  32  Fed.  503;  National 
Fertilizer  Co.  v.  Lambert,  48  Fed.  458;  State  v.  Orr,  68  Conn.  101,  35  Atl.  770; 
Tiede  v.  Schneidt,  105  Wia.  470,  81  N.  W.  826. 

*  Smiley  v.  McDonald,  supra. 

5  Smiley  v.  McDonald,  supra;  Landberg  v.  Chicago,  237  111.  112,  86  N.  E. 
638. 

«  Landberg  v.  Chicago,  237  111.  112,  86  N.  E.  638. 

7  River  Rendering  Co.  v.  Behr,  77  Mo.  91. 

112 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  70 

§  70.  Exclusive  PrivUeges — Monopoly. 

Municipal  corporations  having  the  power  express  or 
implied  to  contract  with  others  to  furnish  its  inhabitants 
with  ferry,  railway,  telephone,  water,  gas,  electricity  or 
other  public  service  or  utiUty  may  grant  franchises,  and 
when  the  privilege  thus  granted  is  accepted  and  the 
grantee  enters  upon  its  right  to  use  the  streets,  a  contract 
is  created  which  is  valid  and  enforceable,  and  which  may 
not  be  revoked  or  rescinded  except  for  cause.* 

But  these  political  subdivisions  of  the  State  have  no 
power  to  grant  exclusive  privileges  or  franchises  to  deal 
in  such  commodities  unless  the  power  to  do  so  is  clearly 
and  unmistakably  conferred  by  the  legislature,  by  express 
grant  or  necessary  implication  therefrom,  ^  and,  indeed, 
in  some  States  there  prevail  constitutional  limitations 
in  regard  to  the  granting  of  exclusive  privileges,  perpetui- 
ties and  monopoUes  which  deny  such  power  even  to  the 
legislatures.^  In  the  absence  of  such  constitutional  restric- 
tions the  power  to  grant  exclusive  privileges  or  franchises 
may  be  conferred  by  the  legislature  upon  municipalities.'' 
In  construing  charter  and  statutes  conferring  upon  munici- 
paUties  the  right  to  provide  for  these  public  conveniences 
and  utiUties   the  authority  to   grant   exclusive  pri\aleges 

1  People  ex  rel.  Pontiac  v.  Cent.  Union  Tel.  Co.,  192  111.  307,  61  N.  E.  428; 
Baxter  Springs  v.  Baxter  Springs  L.  &  P.  Co.,  64  Kan.  591,  68  Pac.  63;  Peo. 
V.  O'Brien,  111  N.  Y.  1,  18  N.  E.  092. 

2  Syracuse  Water  Co.  v.  Syracuse,  116  N.  Y.  167,  22  N.  E.  381;  Altgelt  v. 
San  Antonio,  81  Tex.  436,  17  S.  W.  75;  Detroit  Cits.  St.  Ry.  v.  Detroit  Rail- 
way, 171  U.  S.  48,  43  L.  Ed.  67,  aff'g  110  Mich.  384,  35  L.  R.  A.  859;  Mintum 
V.  L^rue,  64  U.  S.  435,  16  L.  Ed.  574. 

3  Thrift  V.  Bd.  of  Commrs.  of  Elizabeth  City,  122  N.  C.  31,  30  S.  E.  349; 
Atlantic  City  W.  Wks.  Co.  v.  Consumers  Water  Co.,  44  N.  J.  Eq.  427,  15  Atl. 
581. 

^  Freeport  Water  Co.  v.  Freeport  City,  180  U.  S.  587,  45  L.  Ed.  679,  aff'g  186 
111.  179,  57  N.  E.  862;  Danville  W.  Co.  v.  Danville,  180  U.  S.  619,  45  L.  Ed. 
696,  aff'g  186  111.  326,  57  N.  E.  1129;  Milwaukee  Elec.  Ry.  &  L.  Co.  v.  Railroad 
Commrs.,  238  U.  S.  174;  Logan  v.  Pyne,  43  Iowa,  524. 

113 


§  70  ]  THE  POWER  TO  CONTRACT         [  PART  I 

will  not  be  implied  from  the  use  of  general  language/ 
and  these  grants  will  be  strictly  construed  and  any  am- 
biguity or  doubt  resolved  in  favor  of  the  public  and  against 
the  grantee.-  Municipalities  can  bind  themselves  by  con- 
tract only  as  they  are  empowered  by  statute  or  charter  so 
to  do.  They  may  not  accordingly  grant  exclusive  privi- 
leges to  put  in  mains,  pipes,  hydrants  and  wires  for  water, 
light  or  telephone  supply  and  service.  Where  it  cannot 
well  be  claimed  that  express  power  to  grant  exclusive 
franchises  was  delegated  to  them,  pubUc  poUcy  will  not 
permit  the  inference  of  authority  to  make  a  contract  in- 
consistent with  its  legislative  duty  which  is  continuously 
operative  to  make  such  regulations  from  time  to  time  as 
the  public  interest  may  require.^ 

While  public  bodies  naay  make  contracts  for  legitimate 
public  purposes  and  become  liable  for  failure  to  observe 
them,  it  is  not  consistent  with  the  discretionary  or  legis- 
lative powers  vested  in  them  and  effected  through  their 
general  governing  body  in  the  discharge  of  duty,  for  them 
by  contract  to  grant  exclusive  privileges  having  the 
character  of  perpetuity.*  Franchises  for  a  term  of  years 
may  come  within  the  condemnation  of  monopoly  as  well 
as  those  of  indefinite  or  perpetual  duration.^  The  powers 
of  municipal  corporations  are  limited  to  the  express  terms 
of  the  grant,  and  will  not  be  extended  by  inference.    They 

1  Detroit  Cits.  St.  Ry.  Co.  v.  Detroit,  110  Mich.  384,  68  N.  W.  304,  171  U. 
S.  48;  Long  v.  Duluth,  49  Minn.  280,  51  N.  W.  915;  Logan  v.  Pyne,  supra; 
Saginaw  G.  L.  Co.  v.  Saginaw,  28  Fed.  529. 

2  Saginaw  G.  L.  Co.  v.  Saginaw,  supra;  Syracuse  W.  Co.  v.  Syracuse,  116 
N.  Y.  167,  22  N.  E.  381. 

3  Syracuse  W.  Co.  v.  Syracuse,  supra;  Gale  v.  Kalamazoo,  23  Mich.  344; 
Logan  V.  Pyne,  supra;  Des  Moines  G.  Co.  v.  Des  Moines,  47  Iowa,  505;  Norwich 
G.  L.  Co.  V.  Norwich  G.  Co.,  25  Conn.  19. 

♦Syracuse  Water  Co.  v.  Syracuse,  supra;  Westminster  W.  Co.  v.  West- 
minster, 98  Md.  551,  56  Atl.  990. 

6  Columbus  Water  Co.  v.  Mayor  of  Columbus,  48  Kan.  99, 28  Pac.  1097. 

114 


CHAP.  XII  ]         EXERCISE   OF   POLITICAL   POWERS  [  §  70 

cannot  confer  exclusive  privileges  for  the  prosecution  of 
business  except  under  express  grant  of  authority  from  the 
legislature.  Since  monopolies  are  prejudicial  to  the  public 
welfare,  grants  thereof  will  not  be  inferred,  for  to  do  so 
would  presume  a  legislative  intent  in  conflict  with  public 
policy.^  Accordingly,  an  ordinance  which  granted  the 
exclusive  franchise  for  five  years  of  running  omnibuses  in 
the  city  of  Dubuque  was  held  invalid  in  so  far  as  it  at- 
tempted to  prevent  competitors  of  the  grantee  in  the 
ordinance  from  carrying  on  the  same  business.  ^ 

Under  similar  reasoning  where  a  party  has  been  given 
the  right  by  contract  with  a  city  to  build  and  control  a 
market  house  for  the  period  of  ten  years,  the  contract  was 
declared  void  because  it  created  a  monopoly  which  the  city 
had  no  authority  to  grant.  ^  And  the  right  to  do  all 
slaughtering  of  animals  in  a  city  for  a  specified  period  was 
void  for  the  same  reason.* 

Monopolies  are  more  readily  sustained  in  matters  relat- 
ing to  the  abatement  of  nuisances,  sanitative  matters  and 
matters  relating  to  the  public  health  and  in  these  regards 
monopolies  have  been  sustained  for  the  removal  of  garbage 
dead  animals,  offal  and  other  deleterious,  offensive  and 
unwholesome  substances.^  A  covenant  by  a  city  not  to 
grant  to  any  other  person  or  corporation  a  privilege  or 
exclusive  franchise  similar  to  that  granted  to  the  cove- 
nantee does  not  restrict  the  city  from  itself  exercising 
similar  power,  and  this  principle  applies  to  legislative 
grant.    A  grantee  takes  the  risk  of  judicial  interpretation 

1  Logan  V.  Pyne,  supra. 

2  Idem. 

3  Gale  V.  Kalamazoo,  23  Mich.  344,  9  Am.  R.  80. 
*  Chicago  V.  Rumpff,  45  111.  90. 

6  Smiley  v.  McDonald,  42  Neb.  5,  60  N.  W.  355;  Rochester  v.  Gutberlett, 
211  N.  Y.  309.    (Cases  preceding  section.) 

115 


§  70  ]  THE  POWER  TO  CONTRACT         [  PART  I 

of  its  franchise  and  of  the  possible  competition  by  a  city  of 
operating  railroads  of  its  own.^ 

§  71.  Granting  Franchise  to  Use  Streets. 

A  municipality  has  only  power  to  grant  franchises  for 
the  use  of  the  public  streets  so  far  as  this  power  has  been 
delegated  to  it  by  the  legislature.  Primarily  this  power 
to  grant  franchises  resides  in  the  State.  But  where  it 
has  been  conferred,  municipahties  may  grant  to  individuals 
and  not  merely  to  corporations,  a  franchise  for  the  con- 
struction and  operation  of  street  surface  railroads,  and  a 
municipality  has  power  to  require  a  bond  conditioned  for 
the  construction  of  the  road,  as  a  bond  given  to  secure  per- 
formance of  a  duty  which  is  coupled  with  a  right  granted  is 
vahd.2 

But  a  municipality  may  not  grant  to  a  private  business 
corporation,  the  license  or  right  to  maintain  spurs  or  tracks 
in  its  streets  for  the  private  purpose  of  conveying  goods 
from  a  store  to  a  street  railroad.  The  charter  powers  of 
the  municipality  which  authorize  it  to  make  contracts  for 
the  occupation  of  its  streets  will  not  confer  power  to  make 
contracts  for  the  use  of  streets  by  private  individuals.* 
And  such  a  spur  or  siding  may  not  be  maintained  even  by 
a  railroad  corporation  to  connect  a  private  freight  station 
with  its  main  tracks  where  the  maintenance  and  use  of  it 
does  not  bear  a  relation  so  direct  and  necessary  to  the 
fulfillment  of  the  functions  of  the  railroad  corporation  as  to 
bring  it  by  fair  implication  within  the  scope  of  the  grant, 
and  the  department  of  highways  may  not  by  permit  en- 
large the  powers  of  the  railroad  company  and  allow  the 

iKnoxvUle  Water  Co.  v.  Knoxville,  200  U.  S.  22,  50  L.  Ed.  353;  United 
Railroads  v.  San  Francisco,  249  U.  S.  517,  63  L.  Ed.  739,  239  Fed.  987. 
2  Phoenix  v.  Gannon,  195  N.  Y.  471,  88  N.  E.  1066. 
»  Hatfield  v.  Straus,  189  N.  Y.  208,  82  N.  E.  172. 

116 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  71 

maintenance  of  the  spur.  Furthermore,  were  such  an 
exercise  of  power  lawful  in  its  origin,  it  would  be  a  mere 
revocable  privilege.^  Conducting  private  business  and  us- 
ing private  easements  in  public  streets,  even  where  ex- 
pressly authorized,  will  be  condemned  by  the  courts.^ 
The  municipality  may  not  authorize  permanent  encroach- 
ments of  the  walls  of  the  buildings  upon  its  public  streets. 
It  holds  the  title  to  its  streets  impressed  with  the  trust  to 
keep  the  same  open  for  the  public  use  by  the  whole  people, 
and  it  has  no  power  to  use  them  or  permit  them  to  be  used 
other  than  as  the  legislature  may  authorize  for  some 
pubHc  use  or  benefit.  It,  therefore,  cannot  divert  them  by 
contract  to  private  uses.^  And  an  ordinance  which  at- 
tempts to  legalize  the  projection  of  a  building  into  a  pubHc 
street,  withdrawing  a  portion  of  it  from  public  use,  is  un- 
constitutional and  void."* 

When  the  power  to  grant  a  franchise  for  the  use  of  its 
streets  by  a  railroad  is  granted,  the  municipaUty  may 
require  as  a  condition  of  obtaining  the  consent  of  the 
municipaUty  to  permit  the  construction  and  maintenance 
of  the  railroad  that  the  railroad  company  shall  pave  the 
street,  change  the  grade  of  the  street,  or  that  it  shall  erect 
a  depot  at  a  specified  place.  These  are  lawful  and  proper 
conditions.  It  may  also  require  at  any  time  when  the 
public  interest  demands  it  that  such  company  shall  discon- 
tinue the  use  of  the  street  and  shall  remove  its  tracks 

1  Brooklyn  Heights  R.  R.  Co.  v.  Steers,  213  N.  Y.  76,  106  N.  E.  919;  Lincoln 
Safe  Dep.  Co.  v.  New  York,  210  N.  Y.  34,  103  N.  E.  768.  See  Denver  &  R.  G. 
R.  Co.  V.  Denver,  250  U.  S.  241,  63  L.  Ed.  958. 

2  Fifth  Ave.  Coach  Co.  v.  New  York,  194  N.  Y.  19,  86  N.  E.  824,  21  L.  R.  A. 
N.  s.  744,  aflf'd  221  U.  S.  467,  55  L.  Ed.  815;  State  ex  rel.  Belt  v.  St.  Louis,  161 
Mo.  371,  61  S.  W.  658;  People  ex  rel.  Healy  v.  Clean  Street  Company,  225  111. 
470,  80  N.  E.  298. 

3  New  York  v.  Rice,  198  N.  Y.  124,  91  N.  E.  283. 

*  McMillan  v.  Klaw  &  Erlanger,  107  N.  Y.  App.  Div.  407;  Ackerman  v. 
True,  175  N.  Y.  355,  67  N.  E.  629. 

117 


§  71  ]  THE    POWER  TO   CONTRACT  [  PART  I 

therefrom.  And  the  muiiicipaUty  where  it  thus  expressly 
reserves  the  right  to  revoke  the  franchise,  may  revoke  the 
same  at  its  pleasure  even  though  the  railroad  has  gone  to 
large  expense  and  has  compUed  with  all  the  other  condi- 
tions imposed.  It  is  simply  a  matter  of  complying  with 
the  terms  of  its  engagement.^  But  a  railroad  may  gain 
such  an  exclusive  use  of  a  street  that  a  municipahty  may 
not  thereafter  interfere  with  its  structures  or  require  their 
relocation.  2 

Where  a  city  grants  the  right  to  use  that  part  of  its 
streets  under  the  sidewalks  for  vault  purposes,  even  though 
it  imposes  a  fee  therefor,  such  right  is  not  a  contract  but 
a  mere  revocable  license  which  may  be  revoked  at  any 
time  that  the  city  sees  fit  to  use  the  space  for  any  other 
purpose,^  which  may  not  necessarily  be  a  street  purpose, 
but  may  be  even  a  private  purpose.^ 

§  72.  Power  to  Arbitrate. 

Municipalities  usually  possess  the  power  to  sue  and  to  be 
sued  either  expressly  granted  or  derived  necessarily  from 
the  power  to  contract.  The  power  to  arbitrate  springs 
as  an  incidental  or  implied  power  from  both  of  these  other 
powers,  and  unless  restricted  by  statute  such  public  body 
may  without  express  authority  submit  claims  in  its  favor 
or  against  it  to  arbitration.'^  They  have  the  same  power 
to  liquidate  claims  and  indebtedness  which  natural  persons 
have  and  from  that  source  proceeds  power  to  adjust  old  dis- 

1  Del,.  L.  &  W.  R.  Co.  v.  Oswego,  92  N.  Y.  App.  Div.  551. 

2  New  York  v.  Hudson  &  M.  R.  Co.,  229  N.  Y.  141,  128  N.  E.  152. 
» Deshong  v.  New  York,  176  N.  Y.  475,  68  N.  E.  880. 

*  Lincoln  Safe  Dep.  Co.  v.  New  York,  210  N.  Y.  34,  103  N.  E.  768.  See 
Matter  of  Rapid  Trans.  Commrs.,  197  N.  Y.  81,  90  N.  E.  456. 

sBuckland  v.  Conway,  16  Mass.  396;  Dix  v.  Dummerston,  19  Vt.  262; 
Shawneetown  v.  Baker,  85  III.  563,  25  Am.  R.  321;  Hartupee  v.  Pittsburgh, 
131  Pa.  535,  19  Atl.  507;  Walnut  v.  Rankin,  70  Iowa,  65,  29  N.  W.  806;  Kane 
V.  Fond  du  Lac,  40  Wis.  495;  Brady  v.  Brooklyn,  1  Barb.  584. 

118 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  73 

puted  claims  and,  when  the  amount  is  ascertained,  to  pay  it, 
as  other  indebtedness.  By  the  same  reasoning,  they  may  sub- 
mit to  arbitration  all  unsettled  claims  with  the  same  liability 
to  perform  the  award  as  would  rest  upon  a  natural  person.^ 
But  while  this  power  is  not  denied  to  municipahties,  if  a 
special  mode  is  provided  to  exercise  a  particular  power,  as 
for  instance,  the  power  of  eminent  domain,  this  impliedly 
disables  the  public  body  from  submitting  such  a  cause  to 
arbitration.2  The  power  of  submission  rests  with  the 
general  governing  body  of  the  municipality,  ^  although  it  is 
declared  that  its  attorney  may  consent  to  a  reference  for  it.* 
Since  a  submission  is  a  contract,  if  the  power  of  a  munici- 
pality is  limited  to  contracting  in  writing,  and  it  is  pro- 
hibited from  paying  any  claim  not  specifically  appropriated 
for,  this  negatives  the  existence  of  a  common-law  power  to 
submit  to  arbitration.^ 

§  73.  Compromise  of  Disputed  Claims. 

The  power  to  sue  or  be  sued,  which  municipalities  possess, 
carries  with  it  the  implied  power  to  settle  or  compromise 
claims  which  are  in  dispute.  These  public  bodies  have  no 
power  to  give  away  their  funds  or  appropriate  them  to  un- 
warranted purposes.  As  they  cannot  directly  dispose  of 
them  by  way  of  gratuity,  they  cannot  accomplish  such  a 
result  by  indirection. «  They  have  the  power  to  compro- 
mise and  settle  a  claim  in  their  favor  or  against  them  if 

1  Shawneetown  v.  Baker,  supra. 

2  Paret  v.  Bayonne,  39  N.  J.  L.  559,  40  N.  J.  L.  33. 

3  Shawneetown  v.  Baker,  supra;  Griswold  v.  N.  Stonington,  5  Conn.  367. 
*  Paret  v.  Bayonne,  supra. 

5  Dist.  of  Columbia  v.  Bailey,  171  U.  S.  161,  43  L.  Ed.  118. 

8  Bd  of  Supervisors  Orleans  County  v.  Bowen,  4  Lans.  124;  Petersburg  v. 
Mappin,  14  lU.  193,  56  Am.  D.  501;  Agnew  v.  Brail,  124  111.  312,  16  N.  E.  230; 
Ludlow  Valve  Mfg.  Co.  v.  Chicago,  181  111.  App.  388;  Gordon  v.  State,  233 
N.  Y.  1. 

119 


§  73  ]  THE  POWER  TO  CONTRACT         [  PART  I 

there  is  a  bona  fide  dispute  about  the  claim  or  its  amount, 
and  they  may  accept  in  settlement  a  sum  less  than  the  full 
amount.^  A  settlement  of  an  existing  controversy  if  made 
in  good  faith  is  binding,  but  is  not  if  collusively  made.^ 
But  where  a  claim  has  been  reduced  to  judgment,  they 
have  no  power  to  compromise  the  judgment,^  unless  the 
adverse  party  has  appealed  ^  or  is  about  to  appeal  from  the 
judgment  or  his  time  to  appeal  has  not  run.^  But  the  doc- 
trine above  stated  that  they  possess  no  power  to  compro- 
mise a  claim  which  is  reduced  to  judgment  no  longer  ap- 
pUes  after  a  municipality  has  exhausted  its  legal  remedies 
to  collect  it.  They  may  then  pursue  the  methods  which 
ordinary  prudence  dictates  in  the  management  of  business 
by  private  persons,  for  these  apply  to  municipalities,  and 
may  make  a  settlement.^ 

When  the  power  to  audit  and  settle  has  been  expressly 
conferred  by  law  upon  the  chief  financial  officer  of  the 
municipahty  no  power  any  longer  exists  in  its  law  officer 
to  settle  and  adjust  or  compromise  claims,  even  though 
they  are  involved  in  pending  litigation  where  he  has 
appeared.' 

Even  where  power  exists  to  compromise  claims,  a  munic- 
ipality may  not  confess  judgment  upon  a  liability  which  it 
^^•ould  have  no  power  to  incur  by  direct  contract.  Such 
cannot  be  indirectly  made  valid  by  a  consent  to  judgment, 

1  Petersburg  v.  Mappin,  supra;  Agnew  v.  Brail,  124  111.  312,  16  N.  E.  230; 
Orleans  County  v.  Bowen,  su-pra;  Hall  v.  Baker,  74  Wis.  118,  42  N.  W.  104; 
People  V.  San  Francisco,  27  Cal.  655;  Bailey  v.  Philadelphia,  167  Pa.  569,  31 
Atl.  925. 

^  Petersburg  v.  Mappin,  supra. 

3  Famsworth  v.  Wilbur,  49  Wash.  416,  95  Pac.  642. 

*  Orleans  County  v.  Bowen,  4  Lans.  124. 

^  Agnew  V.  Brail,  supra;  Petersburg  v.  Mappin,  supra;  State  v.  Davis,  11 
S.  D.  Ill,  75  X.  W.  897. 

« Washburn  County  v.  Thonip.son,  99  Wis.  585,  75  N.  W.  309. 

'  Bush  V.  O'Brien,  164  N.  Y.  205,  58  N.  E.  106. 

120 


CHAP.  XII  ]         EXERCISE   OF   POLITICAL   POWERS  [  §  74 

where  the  consent  related  to  a  railroad  subscription  which 
the  town  authorities  had  no  power  to  make.^  Consent 
judgments  are  in  effect  contracts  recorded  in  open  court, 
and  such  a  contract  cannot  bind  a  party  to  it  which  had  no 
power  to  make  a  subscription  or  give  a  donation  to  a  rail- 
road any  more  than  its  contracts  not  of  record  could  bind 
it  for  such  a  purpose.^ 

§  74.  Contract  with  Attorney. 

Municipalities  have  the  implied  power  to  employ  coun- 
sel. This  power  is  possessed  by  every  pubUc  body  which 
has  the  power  to  sue  and  be  sued.'  It  needs  not  much 
argument  to  see  that  this  is  necessarily  so,  for  if  it  could  be 
sued  and  still  could  not  employ  an  attorney,  it  would  be  at 
the  mercy  of  Utigants  against  it,  deprived  of  power  to  de- 
fend itself. 

Where,  however,  the  charter  or  statutes  provide  for  a 
city  attorney  or  counsel  to  the  corporation  whose  duties  are 
to  prosecute  and  defend  suits  and  to  take  care  of  the  law 
business  of  the  public  body,  these  express  provisions  exclude 
the  power  to  employ  any  other  attorney. ''  When  it  be- 
comes necessary  for  the  protection  of  the  interests  of  a 
municipality  to  employ  additional  counsel,  such  may  be 
employed,^  to  assist  but  not  to  supersede  the  city  attor- 
ney.^ Where  one  who  was  legal  adviser  for  the  munici- 
pality continues  to  conduct  the  lawsuit  without  objection 

1  Union  Bk.  of  Richmond  v.  Commrs.  of  Oxford,  119  N.  C.  214,  25  S.  E.  966. 

2  Idem. 

3  Farrel  v.  Derby,  58  Conn.  234,  20  Atl.  460;  Memphis  v.  Adams,  9  Heisk. 
(Tenn.)  518. 

4  Lyddy  v.  Long  Island  City,  104  N.  Y.  218,  10  N.  E.  155;  Hope  v.  Alton, 
214  111.  102,  73  N.  E.  406;  Merriam  v.  Barnum,  116  Cal.  619,  48  Pac.  727. 

5  Boise  City  v.  Randall,  8  Idaho,  119,  66  Pac.  938;  Moorehead  v.  Murphy, 
94  Minn.  123,  102  N.  W.  219;  Vicksburg  W.  Co.  v.  Vicksburg,  99  Miss.  132, 
54  So.  852. 

«  Cloughv.  Hart,  8  Kan.  487;  State,  Hoxsey  v.  Paterson,  40  N.  J.  L.  186. 

121 


§  74  ]  THE  POWER  TO  CONTRACT         [  PART  I 

after  his  official  term  has  expired,  he  may  recover  for  his 
services  upon  an  impHed  obligation.^  This  power  of  a 
municipaUty  to  employ  counsel  extends  to  the  defense  of 
one  of  its  police  officers  who  is  sued  for  false  imprison- 
ment.- But  because  it  empowers  its  attorney  to  appear 
and  defend  an  action  wherein  the  officer  is  charged  with 
a  tort  will  not  make  the  city  liable  for  the  tort.^  Not 
being  liable  for  these  acts  of  its  police  officers,  it  is  not  the 
duty  of  the  municipahty  to  defend  them,  and  while  it  may, 
this  will  not  authorize  the  city  attorney  to  agree  to  pay  a 
stenographer  for  performing  services  in  an  action  to  which 
the  city  is  not  a  party.  ^  The  governor  of  a  State  has  no 
implied  power  to  employ  counsel  at  the  expense  of  the 
State,  ^  and  where  authorized  to  make  a  contract  with  an 
attorney,  he  may  not  exceed  the  authority  conferred.^ 
The  mayor  has  no  implied  power  to  employ  attorneys  al- 
though in  case  of  an  emergency  such  power  will  be  implied 
to  protect  the  city.^ 

But  where  the  mayor  finds  himself  forced  into  court 
with  the  official  law  officer  arrayed  against  him  to  compel 
him  to  take  a  course  of  official  action  which  he  deemed 
violative  of  law  and  detrimental  to  the  interests  of  the  city 
and  he  is  thereby  compelled  to  engage  counsel  to  defend 
him,  while  no  authority  will  be  implied  in  him  to  employ 
counsel,  he  will  be  compensated  under  the  general 
principle  of  law  that  where  an  officer  is  required  by  law  to 

1  Langdon  v.  Castleton,  30  Vt.  285. 

2  Cullen  V.  Carthage,  103  Ind.  196,  2  N.  E.  571. 

3  Buttrick  v.  Lowell,  83  Mass.  (1  Allen)  172. 

*  Chicago  V.  Williams,  182  111.  135,  55  N.  E.  123. 

'  CahiU  V.  Bd.  of  State  Auditors,  127  Mich.  487,  86  N.  W.  950;  People  ex  rel. 
Spencer  v.  Knight,  116  Cal.  108,  47  Pac.  925. 

« Julian  V.  State,  122  Ind.  68,  23  N.  E.  690,  140  Ind.  581,  39  N.  E.  923. 

'  Louisville  v.  Murphy,  86  Ky.  53,  5  S.  W.  194;  see  Bamert  v.  Paterson,  48 
N.  J.  L.  395,  6  Atl.  15. 

122 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  75 

perform  a  duty  involving  the  disbursement  of  money  out 
of  pocket,  he  is  entitled  to  be  reimbursed.^ 

Under  some  circumstances,  where  benefits  are  received 
and  employment  by  the  mayor  is  acquiesced  in,  there  will 
arise  an  implied  obligation  to  pay.^  Where  the  legislature 
authorizes  the  employment  of  an  attorney  to  prosecute  a 
claim  of  the  State  requiring  the  procuring  of  legislation 
upon  an  agreement  to  compensate  him  only  in  event  of 
success,  and  the  State  is  bound,  when  the  payment  of  the 
claims  is  obtained,  to  hold  the  funds  for  the  benefit  of  the 
persons  for  whom  they  were  collected  and  cannot  pay 
part  of  them  as  a  fee,  it  is  Hable  to  pay  the  moral  obliga- 
tion which  it  owes  out  of  its  own  funds. ^ 

§  75.  To  Acquire  and  Hold  Property. 

Municipalities  may  take  by  purchase  and  hold  real 
estate,  by  the  immemorial  usage  of  the  country  creating 
such  right  as  an  incident  to  their  corporate  powers.  In 
colonial  days  they  possessed  the  power  upon  a  majority 
vote  to  make  grants  of  the  same  for  purposes  of  settle- 
ment. And  in  these  days,  the  same  right  is  exercised  and 
much  land  comes  into  their  possession  which  is  not  essen- 
tial for  their  corporate  needs,  such  as  the  erection  of 
public  buildings  and  the  like.''  While  the  inhabitants  of 
municipahties  may  not  be  taxed  to  raise  money  for  the 
purchase  of  lands  to  be  used  for  a  purpose  not  corporate, '^ 
these  pubUc  bodies  may  under  implied  powers  take  real 
or  personal  property  by  gift  or  devise  even  though  not 

1  Barnert  v.  Paterson,  48  N.  J.  L.  395,  6  Atl.  15. 

2  Mound  City  v.  Snoddy,  53  Kan.  126,  35  Pac.  1112. 

3  Davis  V.  Comm.,  164  Mass.  241,  41  N.  E.  292. 

*  Worcester  v.  Eaton,  13  Mass.  371,  9  Am.  Dec.  155;  Christy  v.  St.  Louia, 
20  Mo.  143,  61  Am.  D.  598. 

^  Markley  v.  Mineral  City,  58  Ohio  St.  430,  51  N.  E.  28;  Worcester  v.  Eaton, 
supra. 

123 


§  75  ]  THE    POWER    TO  CONTRACT  [  PART  I 

intended  to  be  used  for  a  corporate  purpose.^  They  may 
accordingly  own,  control  and  manage  farms,  buildings 
or  other  property,  operating  them  as  individuals  do  for 
their  own  emolument,  profit  and  advantage,  and  entirely 
disconnected  from  any  public  use.^  They  may  in  like 
manner  take  a  voluntary  grant  of  an  easement  for  street 
purposes.'  But  they  possess  no  power  to  acquire  real 
estate  for  the  purpose  of  donating  same  to  third  persons 
to  induce  them  to  construct  and  operate  manufacturing 
plants  within  their  corporate  limits.*  If  in  the  course  of 
acquiring  property  they  exceed  their  corporate  powers, 
the  grantors  may  not  avail  themselves  of  this  fact;  the 
only  authority  who  may  question  the  misuser  of  powers  is 
the  State  and  even  the  courts  may  not  in  a  collateral  way 
declare  void  conveyances  made  to  them  in  good  faith. ^ 

§  76.  To  Sell  Property. 

The  real  or  personal  property  of  a  private  nature  which 
belongs  to  a  municipality  may  be  alienated  or  sold  by  it 
under  powers  which  will  be  implied  from  its  general 
powers.^  But  these  public  bodies  have  no  power  to  sell 
or  dispose  of  property  of  a  public  nature  in  violation  of 
the  trusts  or  uses  upon  which  it  is  held  unless  relieved  of 
the  trusts  and  authorized  to  sell  by  the  legislature.^    The 

1  Worcester  t;.  Eaton,  supra;  Oliver  v.  Worcester,  102  Mass.  489,  3  Am.  R. 
485;  Libby  v.  Portland,  105  Me.  370,  74  Atl.  805;  Hathaway  v.  Milwaukee,  132 
Wis.  249,  111  N.  W.  570. 

2  Libby  v.  Portland,  105  Me.  370,  74  Atl.  805. 

»  Hathaway  v.  Milwaukee,  132  Wis.  249,  111  N.  W.  570. 

*  Markley  v.  Mineral  City,  supra. 

6  Raley  v.  Umatilla,  15  Oreg.  172,  13  Pac.  890. 

6  Ft.  Wayne  v.  Lake  Shore  &  M.  S.  R.  Co.,  132  Ind.  558,  32  N.  E.  215;  Beach 
t'.  Haynes,  12  Vt.  15;  Jamison  v.  Fopiana,  43  Mo.  565,  97  Am.  D.  414;  New- 
bold  V.  Glenn,  67  Md.  489,  10  Atl.  242;  Warren  County  v.  Patterson,  56  III. 
Ill;  Reynolds  v.  Stark  County  Commrs.,  5  Ohio  St.  204. 

^  Brooklyn  Park  Commrs.  v.  Armstrong,  45  N.  Y.  234;  Douglas  v.  Mont- 
gomery, 118  Ala.  599,  24  So.  745;  Alton  v.  Illinois  T.  Co.,  12  111.  38,  52  Am.  D. 

124 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  76 

authorities,  however,  establish  a  distinction  between 
property  which  is  purchased  for  a  pubhc  purpose  and 
actually  dedicated  to  that  use  and  property  so  purchased 
but  not  actually  dedicated  to  the  public  purpose.  In 
the  former  case,  there  is  no  implied  power  to  alienate  or 
dispose  of  it,^  while  in  the  latter  case  such  power  will  be 
implied,-  unless  restrained  by  charter  or  statute.  Even 
where  it  is  expressed  in  the  deed  of  conveyance  of  the  land 
purchased  that  it  is  for  a  public  common,  until  it  is  de- 
voted actually  to  such  a  purpose,  it  may  be  alienated.^ 
But  when  so  devoted,  it  may  not  be  alienated  or  disposed 
of.^  Public  buildings,  parks,  squares,  wharves,  landing 
places,  waterworks,  fire  apparatus  and  fire  houses  and  like 
properties  of  a  municipality  are  generally  regarded  as  held 
for  a  public  purpose  and  may  not  be  sold  without  statutory 
sanction.^  In  those  instances,  where  a  power  of  sale  is 
conferred,  it  will  not  permit  the  municipality  to  indulge  in 
barter  or  exchange.^  Where  a  privilege  or  easement  is 
conferred  by  a  municipality  to  use  its  property  for  vault 
purposes  under  a  city  sidewalk,  the  privilege  or  easement 
may  be  recalled  by  it  when  it  needs  the  land  for  any 
purpose,  and  the  right  of  recall  is  not  to  be  limited  to 
cases  where  the  land  is  necessary  for  street  purposes  but  it 
may  be  taken  back  for  its  proprietary  or  business  pur- 
poses, since  the  very  object  of  acquiring  title  in  fee  as 

479;  Lake  County  W.  Co.  v.  Walsh,  160  Ind.  32,  65  N.  E.  530;  Cook  v.  Burling- 
ton, 30  Iowa,  94,  6  Am.  R.  649;  Rose  v.  Baltimore,  51  Md.  256,  34  Am.  R. 
307;  Palmer  i>.  Albuquerque,  19  N.  M.  285,  142  Pac.  929,  L.  R.  A.  1915  A.  1106. 

1  State  V.  Woodward,  23  Vt.  92;  Ft.  Wayne  v.  Lake  Shore  &  M.  S.  R.  Co., 
supra. 

2  Ft.  Wayne  v.  Lake  Shore  &  M.  S.  R.  Co.,  supra;  Beach  v.  Haynes,  supra. 
'  Man. 

*  State  V.  Woodward,  supra;  Ft.  Wayne  v.  Lake  Shore  &  M.  S.  R.  Co.,  supra. 

5  Huron  Waterworks  Co.  v.  Huron,  7  S.  D.  9,  62  N.  W.  975;  Meriwether  v. 
Garrett,  102  U.  S.  472,  26  L.  Ed.  197;  New  Orleans  v.  Morris,  105  U.  S.  600, 
26  L.  Ed.  1184. 

6  Cleveland  v.  State  Bank,  16  Ohio  St.  236. 

125 


§  76  ]  THE  POWER  TO  CONTRACT         [  PART  I 

distinguished  from  an  easement  is  to  vest  in  the  public  the 
right  to  use  the  land  for  all  purposes.^ 

"UTiarves  and  piers  which  are  the  continuations  of 
public  streets  held  by  the  municipality  in  trust  for  the 
public  use  may  not  be  alienated  as  the  municipahty  has  no 
power  to  convey  title  in  contravention  of  the  trust  unless 
authorized  to  do  so  by  legislative  sanction.  But  a  city 
has  power  to  dedicate  its  own  lands  to  street  uses  and  may 
bind  itself  by  covenant  with  the  grantees  of  abutting 
property  that  the  lands  so  dedicated  shall  be  kept  open 
forever  as  a  public  street. ^ 

A  municipality  under  these  principles  may  lease  for  the 
erection  of  summer  cottages  its  common  lands,  which  it  had 
power  by  appropriate  vote  to  divide  amongst  its  inhabitants, 
as  long  as  they  are  not  needed  for  public  purposes.^ 

§  77.  To  Borrow  Money  and  Incur  Indebtedness. 

Since  municipahties  can  only  exercise  those  powers 
which  have  been  expressly  granted  to  them  by  statute  or 
such  as  are  necessarily  and  fairly  impUed  from  those 
conferred  or  are  essential  to  the  declared  objects  and 
purposes  for  which  they  were  created  and  ordained,  the 
people  and  their  property  can  only  be  bound  in  accordance 
with  those  powers.  It  does  not  belong  to  local  govern- 
ments as  a  mere  matter  of  course  to  raise  loans.  It  is  not 
a  power  incident  to  their  creation.  When  they  incur  debts, 
the  appropriate  method  of  paying  for  them  is  in  cash  or  its 
equivalent  obtained  through  the  power  of  taxation.^     In 

1  Lincoln  Safe  Dep.  Co.  v.  New  York,  210  N.  Y.  34,  103  N.  E.  768. 

2  Knickerbocker  Ice  Co.  v.  Forty-Second  St.  &  G.  S.  F.  Co.,  85  N.  Y.  App. 
Div.  .530, 176  X.  Y.  408,  68  N.  E.  864;  People  ex  rel.  N.  Y.  Cent.,  etc.,  R.  Co.  v. 
Priest,  206  N.  Y.  274,  99  N.  E.  547. 

3  Davis  V.  Rockport,  213  Mass.  279,  100  N.  E.  612. 

*  Na-shvUle  v.  Ray,  86  U.  S.  468,  22  L.  Ed.  164;  Wells  v.  Salina,  119  N.  Y. 
280,  23  N.  E.  870;  Hackettstown  v.  Swackhamer,  37  N.  J.  L.  191. 

126 


CHAP.  XII  EXERCISE   OF   POLITICAL   POWERS  [  §  77 

order  to  exercise  a  different  means  of  payment,  such  as 
borrowing  money  through  an  issue  of  bonds,  municipaUties 
must  be  in  possession  of  the  power  to  do  so  by  express 
grant  or  it  must  be  clearly  implied  from  legislative  enact- 
ment.^ Accordingly,  it  is  generally  and  uniformly  de- 
clared that  the  power  to  borrow  money  is  not  to  be 
implied  as  an  incident  to  general  powers,  but  on  the 
contrary  its  existence  will  not  be  inferred  from  general 
language  but  will  be  denied.-  Its  negation  rests  in  addi- 
tion upon  grounds  of  public  pohcy  as  a  safeguard  against 
heavy  and  ruinous  debt  which  might  be  incurred  by 
improvident,  careless  or  faithless  officials.  Were  the  rule 
otherwise,  money  could  be  borrowed  for  one  purpose 
and  spent  for  another,  to  the  utter  ruin  of  muni- 
cipahties.^ 

There  is,  however,  a  well-recognized  distinction  between 
the  power  to  borrow  money  to  pay  a  contract  debt  and 
the  power  to  contract  the  debt  on  credit.  In  the  latter 
case,  the  use  of  credit  promotes  the  accompHshment  of  the 
authorized  object,  and  payment  is  made  by  taxation. 
This  power  to  use  credit  is  generally  recognized. ^  Where 
the  power  to  borrow  money  is  not  derived  from  express 
grant  but  is  incidental  to  general  powers  of  government 
it  exists  with  the  limitation  upon  it  that  money  may  only 
be  borrowed  to  carry  out  express  powers  and  for  purposes 
for  which  it  may  legitimately  be  raised  by  taxation.^ 


I 


Allen  V.  Intendant  &  C.  of  Lafayette,  89  Ala.  641,  8  So.  30;  Nashville  v. 
Ray,  supra;  Wells  v.  Salina,  supra;  Hackettstown  v.  Swackhamer,  supra; 
Hanger  v.  Des  Moines,  52  Iowa,  193,  2  N.  W.  1105;  Lemon  v.  Newton,  134 
Mass.  476. 

2  Wells  V.  Salina,  supra. 

3  Ketchum  v.  Buffalo,  14  N.  Y.  356. 

*  Ketchum  v.  Buffalo,  supra;  Galena  v.  Corwith,  48  111.  423. 
5  Merrill  v.  Monticello,  138  U.  S.  673,  34  L.  Ed.  1069;  Chillicothe  Bk.  v. 
Chillicothe,  7  Ohio,  31,  30  Am.  D.  185. 

127 


§  78  ]  THE  POWER  TO  CONTRACT         [  PART  I 

§  78.  To  Assume  Responsibilities  which  the  Law  Places  on 
Others. 

Municipalities  have  no  power  to  assume  obligations  or 
responsibilities  which  the  law  casts  upon  others.^  They 
have  no  power  to  aid  a  railroad  corporation  in  the  per- 
formance of  the  duties  and  responsibilities  which  the 
maintenance  of  its  road  imposes.  Such  an  attempt  by 
v>ay  of  a  contract  to  do  so  is  not  only  ultra  vires  but  is 
without  consideration  to  support  it.^  Contracts  by  which 
muni  cipah ties  undertake  to  assume  obligations  and  duties 
properly  resting  on  others  to  restore  a  street/  to  build  a 
bridge,^  or  to  maintain  a  bridge  ^  are  wholly  beyond 
their  powers,  and  void.  And  it  may  not  make  a  contract 
to  bear  part  of  the  expense  of  building  a  bridge  or  repair- 
ing it.^  Even  a  State  may  not  assume  an  obligation  which 
belongs  to  the  Nation,  when  limited  by  its  own  Constitu- 
tion." 

§  79.  Expending    Money   for   Purposes    not   Public    and 
Making  Contracts  to  Carry  Out  Such  Objects. 

The  National  and  State  governments,  except  as  re- 
stricted and  limited  by  their  Constitutions,  have  unlimited 
power  to  determine  what  is  for  the  public  good  and  what 
are  public  uses  and  purposes  for  which  public  money  may 
be  expended.    These  are  matters  confided  to  the  keeping 

>  Snow  V.  Deerfield  Tp.,  78  Pa.  St.  181;  Minneapolis  R.  Co.  v.  Minneapolis, 
124  Minn.  351,  145  N.  W.  609. 

2  Snow  V.  Deerfield  Tp.,  supra;  Newton  v.  C.  R.  I.  &  Pac.  Ry.  Co.,  66  Iowa, 
422,  23  N.  W.  905. 

'  Snow  V.  Deerfield  Tp.,  supra. 

*  State  t;.  St.  Paul  M.  &  M.  Ry.  Co.,  98  Minn.  380,  108  N.  W.  261. 

»  State  ex  re/.  St.  Paul  f.  Minnesota  Trans.  Ry.  Co.,  80  Minn.  108,  83  N.  W. 
32. 

•  Minneapolis,  St.  P.  R.  &  D.  E.  T.  Co.  v.  Minneapolis,  124  Minn.  351,  145 
N.  W.  609. 

'  People  V.  Westchester  Co.  Nat.  Bank,  231  N.  Y.  465,  132  N.  E.  241. 

128 


CHAP.  XII  ]        EXERCISE   OF   POLITICAL   POWERS  [  §  79 

of  the  Congress  and  the  legislatures  and  cannot  be 
controlled  by  the  courts  by  judicial  revision.  Whenever 
accordingly  contracts  are  made  by  these  National  and 
State  departments  of  government  or  by  agents  and 
officers  of  the  Nation  or  State  thereunto  duly  authorized, 
pursuant  to  appropriate  legislation,  the  courts  have  no 
power  to  determine  that  the  purpose  is  not  pubhc,  except 
in  case  of  constitutional  restraint,  that  power  being  vested 
solely  as  indicated.  Contracts  made,  therefore,  and  lia- 
bilities incurred  by  a  World's  Fair  Commission  appointed 
under  State  authority  are  valid  and  enforceable  even 
though  a  private  corporation  in  charge  of  such  World's 
Fair  might  profit  by  it,  since  the  statute  was  not  passed  to 
confer  such  incidental  benefit  but  to  promote  the  public 
good.^  But  where  municipalities  or  other  similar  pubHc 
bodies  undertake  such  expenditures  they  must  find  war- 
rant for  so  doing  in  express  grant  of  authority  and  it  will 
not  be  implied,  from  the  general  powers  possessed  by  such 
bodies.  Unless  so  authorized  they  have  no  right  or 
authority  to  expend  money  or  contract  a  fiabihty  to  pay  it 
for  a  purpose  which  was  not  clearly  public.  Accordingly 
these  various  political  subdivisions  of  the  State  have  no 
power  to  appropriate  money  and  make  contracts  involving 
their  expenditure  to  celebrate  important  events  in  the 
history  of  the  country  such  as  the  anniversary  of  the 
Declaration  of  Independence,^  nor  to  celebrate  the  anni- 
versary of  the  surrender  of  Cornwallis.^  They  may  not 
make  valid  contracts  for  the  celebration  of  such  an  occa- 

»  Daggett  V.  Colgan,  92  Cal.  53,  28  Pac.  51,  14  L.  R.  A.  474.  See  Waterloo 
Woolen  Mfg.  Co.  v.  Shanahan,  128  N.  Y.  342,  28  N.  E,  358;  U.  S.  v.  Old  Set- 
tlers, 148  U.  S.  427,  37  L.  Ed.  509. 

2  Hodges  V.  Buffalo,  2  Denio,  110;  Hood  v.  Lynn,  1  Allen,  103;  New  London 
V.  Brainard,  22  Conn.  552;  Austin  v.  Coggeshall,  12  R,  I.  329. 

»  Tash  V.  Adams,  10  Cush.  252. 

129 


§  79  ]  THE  POWER  TO  CONTRACT         [  PART  I 

sion  as  the  centennial  anniversary  of  their  existence  as 
cities,  counties  and  towns  ^  nor  for  entertainments  and 
dinners  for  its  citizens  or  guests.^  Such  contracts  are  void 
and  even  though  they  have  been  fully  carried  out  and  per- 
formed by  the  contractor  with  the  pubhc  body  and  the 
latter  has  had  the  advantages  of  performance,  there  is  no 
liability  on  the  part  of  the  public  body.^  Long  established 
custom  may  not  be  resorted  to  as  a  basis  to  sustain  such 
contracts  and  relieve  them  from  invalidity.*  A  town 
cannot  build  places  of  amusement  for  its  inhabitants,^  nor 
abate  taxes.^  It  may  not  expend  money  to  obtain  a  city 
or  town  charter "  nor  to  oppose  division  of  the  town  ^ 
nor  to  pay  a  private  fire  company  ^  nor  to  build  a  court- 
house ^°  or  a  county  jail."  In  Uke  manner  it  may  not 
build  a  bridge  in  another  town,^-  or  contribute  to  a  pri- 
vate cemetery  association.^^  It  cannot  divide  among  its 
inhabitants  money  received  from  the  State, ^*  nor  expend 
money  for  purposes  of  local  defense. ^^  Where,  however, 
power  has  been  conferred  upon  a  city  to  provide  for  the 
entertainment  of  visitors  and  to  celebrate  anniversaries  of 
historical  events  ^^  or  where  such  power  has   been  given 

1  Love  V.  Raleigh,  116  N.  C.  296,  21  S.  E.  503. 

2  Stegmaier  v.  Goeringer,  218  Pa.  St.  499,  67  Atl.  782. 

'  Hodges  V.  Buffalo,  supra;  Austin  v.  Coggeshall,  supra. 

*  Stegmaier  v.  Goeringer,  supra. 

« Stetson  V.  Kempton,  13  Mass.  272. 

•  Cooley  V.  Granville,  10  Gush.  56. 
'  Frost  V.  Belmont,  6  Allen,  152. 

8  Coolidge  V.  Brookline,  114  Mass.  592;  Westbrook  v.  Deering,  63  Me.  231; 
Contra,  Farrel  v.  Derby,  58  Conn.  234,  20  Atl.  460. 

9  Greenaugh  v.  Wakefield,  127  Mass.  275. 
"  Bachelder  v.  Epping,  28  N.  H.  354. 

"  Drew  V.  DavLs,  10  Vt.  506. 

^2  Concord  v.  Boscawen,  17  N.  H.  465. 

"  Luques  v.  Dresden,  77  Me.  186. 

»  Hooper  v.  Emery,  14  Me.  375. 

15  Stetson  V.  Kempton,  supra;  Perkins  v.  Milford,  59  Me.  315. 

"  Tatham  v.  Philadelphia,  11  Phila.  276. 

130 


CHAP.  XII  ]         EXERCISE   OF   POLITICAL   POWERS  [  §  79 

under  general  statutes,  contracts  made  in  carrying  out 
such  celebrations  are  valid.  ^  It  may  through  its  select- 
men submit  disputed  claims  to  arbitration  and  the  award 
will  bind  the  town.^  It  may  settle  cases  and  employ 
counsel  in  appropriate  instances.^ 

1  Hill  V.  Easthampton,  140  Mass.  381,  4  N.  E.  811;  Hubbard  v.  Taunton, 
140  Mass.  467,  5  N.  E.  157. 

2  New  Haven  v.  Weston,  87  Vt.  7,  86  Atl.  996,  and  cases  cited. 
^  Idem. 


131 


CHAPTER  XIII 

IMPAIRING  OBLIGATION  OF  CONTRACTS 

§  80.  Impairment  of  Obligation. 

No  absolute  right  beyond  legislative  control  vests  in 
persons  named  in  a  statute  upon  whom  is  conferred  power 
to  do  certain  things,  and  a  repeal  of  the  statute  will 
not  impair  the  obligation  of  a  contract.^  A  contract 
does  not  spring  into  existence  from  the  passage  of  a 
statute  which  gave  to  persons  claiming  to  have  paid  an 
illegal  tax  an  opportunity  to  present  to  the  general  govern- 
ing body  of  a  county  a  claim  for  reimbursement.  ^  The 
power  conferred  by  statute  upon  a  municipahty  to  make  a 
contract  to  furnish  light  in  its  streets  without  power  to 
make  a  continuing  contract  does  not  prevent  the  legislature 
from  later  repeahng  the  statute  and  terminating  any  con- 
tract that  was  made  thereunder.^  Empowering  municipal- 
ities to  deal  with  public  service  corporations  does  not 
compel  them  so  to  deal,  nor  does  it  confer  upon  such  cor- 
porations the  exclusive  right  to  sell  the  commodity.* 
And  where  a  statute  conditionally  protects  a  public  service 
company    during    the    continuance    of    the    statute    from 

>  Wilkes  County  v.  CaU,  123  N.  C.  308,  31  S.  E.  481,  44  L.  R.  A.  252;  People 
ex  rel.  v.  Montgomery  Co.,  67  N.  Y.  109,  23  Am.  R.  94. 

2  People  ex  rel.  Canajoharie  Nat.  Bk.  v.  Montgomery  Co.,  67  N.  Y.  109, 
23  Am.  R.  94. 

3  Richmond  Co.  G.  Co.  v.  Middletown,  59  N.  Y.  228;  Contra,  Cits.  W.  Co.  v. 
Bridgeport  Hyd.  Co.,  55  Conn.  1,  10  Atl.  170;  White  v.  Meadville,  177  Pa.  St. 
643,  35  Atl.  695. 

*  Cits.  Elec.  L.  &  P.  Co.  v.  Sands,  95  Mich.  551,  55  N.  W.  452;  Andrews  v. 
South  Haven,  187  Mich.  294,  153  N.  W.  827. 

132 


CHAP.  XIII  ]     IMPAIRING   OBLIGATION   OF   CONTRACTS         [  §  80 

municipal  competition  such  a  statute  confers  no  new  or 
additional  franchise  and  creates  no  contract  and  its  repeal 
will  leave  the  municipality  free  to  compete.^  The  grantee 
of  the  charter  takes  nothing  by  implication.  There  is  no 
prohibition  against  granting  another  charter  for  a  similar 
franchise. 2  Provisions  in  charters  or  statutes  whereby  the 
State  barters  away  its  powers  of  sovereignty,  such  as  the 
police  power,  the  power  of  taxation  or  the  power  of  emi- 
nent domain  are  void.  No  rights  vest,  no  powers  are  con- 
ferred and  no  contract  arises  from  such  provisions  and 
when  questioned  are  not  protected  by  the  contract  clause 
of  the  Federal  Constitution.^ 

When  a  municipahty  enters  into  a  lawful  contract  which 
it  had  the  power  to  make,  the  legislature  may  not  deprive 
it  of  its  power  to  carry  it  out,  nor  can  it  impair  its  obliga- 
tion.^ A  franchise  granted  to  and  accepted  by  a  public 
service  company  on  specified  conditions  is  a  contract  and 
cannot  be  impaired  without  the  company's  consent.^  And 
rights  acquired  under  a  statute  of  a  State  which  is  in  its 
nature  a  contract  and  which  does  not  reserve  to  the  legis- 
lature the  power  of  repeal  cannot  be  divested  by  subse- 
quent legislation.^  But  it  is  otherwise  where  the  power  is 
reserved.^  The  exclusive  right  to  light  streets  with  gas 
for  a  definite  period  is  not  impaired  by  a  later  contract 

1  Re  Brooklyn,  143  N.  Y.  596,  26  L.  R.  A.  270,  166  U.  S.  685. 

2  Re  Brooklyn,  supra;  Skaneateles  W.  Co.  v.  Skaneatelea,  161  N.  Y.  154,  55 
N.  E.  562;  Sears  v.  Akron,  246  U.  S.  242,  62  L.  Ed.  688. 

*  Hyde  Parkr;.  Oakwoods  Cemetery  Assn.,  119  111.  141,  7  N.  E.  627;  Matter 
of  McAneny,  198  N.  Y.  App.  Div.  205,  affd  232  N.  Y.  377;  Williamson  v. 
New  Jersey,  130  U.  S.  189,  32  L.  Ed.  915,  aff'g  44  N.  J.  L.  165;  Saginaw  County 
V.  Bubinger,  137  Mich.  72,  100  N.  W.  261;  Westminster  W.  Co.  v.  Westminster, 
98  Md.  551,  56  Atl.  990. 

4  Goodale  v.  FenneU,  27  Ohio  St.  426,  22  Am.  R.  321. 

5  New  York  v.  Second  Ave.  R.  Co.,  32  N.  Y.  261. 

« Brooklyn  Cen.  R.  Co.  v.  Brooklyn  C.  R.  Co.,  32  Barb.  358. 
^  Sears  v.  Akron,  supra;  Ramapo  Water  Co.  v.  New  York,   236  U.  S.  579, 
69  L.  Ed.  731. 

133 


§  80  ]  THE  POWER  TO  CONTRACT         [  PART  I 

with  another  company  to  light  the  same  streets  by  elec- 
tricity.^ 

The  repeal  of  a  statute  under  which  an  award  has  been 
made  in  condenmation  proceedings  cannot  affect  the  valid- 
ity of  the  award  or  prevent  its  payment  as  it  has  all  the 
force  and  effect  of  a  judgment,  a  contract  of  the  highest 
nature,-  and  the  vaUdity  of  judgments  may  not  be 
impaired.^ 

Where  valid  franchises  are  obtained  their  exercise  may 
not  be  held  in  abeyance  for  an  indefinite  time.  For 
although  they  constitute  property  they  may  be  forfeited  by 
failure  of  exercise,^  or  by  subsequent  abandonment  after 
they  have  been  exercised.^  And  when  no  time  is  pre- 
scribed they  must  be  exercised   within  a  reasonable   time.^ 

§81.  Power  to  Contract — Obligation  of  Contract — Power 
of  Public  Body  to  Change  Laws  Forming  Basis  of 
Contract. 
Where  a  contract  between  the  government  and  its  con- 
tractor consists  of  several  acts  of  Congress,  the  contract 
when  acted  upon  and  in  operation  is  binding  upon  the 
government  and  it  cannot,  without  the  consent  of  its  con- 
tractor, change  the  terms  of  the  contract  by  subsequent 
legislation.^ 

»  Saginaw  G.  L.  Co.  v.  Saginaw,  28  Fed.  529. 

2  People  ex  rel.  Reynolds  v.  Buffalo,  140  N.  Y.  300,  35  N.  E.  485. 

3  Hadfield  v.  New  York,  6  Robt.  501. 

^  People  V.  Broadway  R.  Co.,  126  N.  Y.  29,  26  N.  E.  961;  New  York  Elec. 
Lines  Co.  v.  Empire  City  Subway  Co.,  201  N.  Y.  329,  94  N.  E.  326,  aff'd  235 
U.  S.  179,  59  L.  Ed.  184. 

6  People  V.  Albany  &  Vermont  R.  Co.,  24  N.  Y.  261;  First  Construction 
Co.  V.  Slate,  221  N.  Y.  295,  116  N.  E.  1020. 

eN.  Y.  V.  Bryan,  196  N.  Y.  158,  89  N.  E.  467;  First  Construction  Co.  v. 
State,  221  N.  Y.  295,  116  N.  E.  1020. 

7  U.  S. ;;.  Cent.  Pac.  R.  Co.,  118  U.  S.  235,  30  L.  Ed.  173,  aff'g  21  Ct.  CI.  180; 
Sinking  Fund  Cases,  99  U.  S.  700,  718,  25  L.  Ed.  496. 

134 


PART  II.    CREATION  AND  FORMATION  OF 
THE   CONTRACT 

CHAPTER  XIV 

DEFINITION  AND  CLASSIFICATION  OF  CONTRACT 

§  82.  The  Contract  Defined. 

A  contract  is  an  agreement  to  do  or  not  to  do  a  partic- 
ular thing  1  or  as  more  fully  stated  it  is  a  bargain  or  agree- 
ment voluntarily  made  upon  good  consideration,  between 
two  or  more  persons  capable  of  contracting  to  do  or  for- 
bear to  do  some  lawful  act.^  And  a  public  contract  is 
measured  and  governed  by  the  same  laws  that  control 
natural  persons  in  contract  matters,  whether  it  be  the 
nation,  3  State,  ^  city,  town  or  village.^  If  even  the  United 
States,  or  the  States,  step  down  from  their  position  of 
sovereignty  and  enter  the  domain  of  commerce,  they  sub- 
mit themselves  to  the  same  laws  that  govern  individuals 

1  Marshall,  C.  J.,  in  Sturges  v.  Crowninshield,  4  Wheat.  (U.  S.)  122,  4  L.  Ed. 
529;  People  v.  Dummer,  274  111.  637,  113  N.  E.  934. 

2  Justice  V.  Lang,  42  N.  Y.  493;  U.  S.  v.  Richards,  149  Fed.  443;  Virginia 
City  Gas  Co.  v.  Virginia  City,  3  Nev.  320. 

3  Hollerbach  v.  U.  S.,  233  U.  S.  165,  58  L.  Ed.  898;  U.  S.  v.  Tingey,  5  Peters 
(U.  S.),  115, 8  L.  Ed.  72;  U.  S.  v.  Bradley,  10  Peters  (U.  S.),  343,  9  L.  Ed.  448; 
U.  S.  V.  Bostwick,  94  U.  S.  53,  24  L.  Ed.  65;  Whiteside  v.  U.  S.,  93  U.  S.  247, 
23  L.  Ed.  882,  aff'g  8  Ct.  CI.  532;  Cooke  v.  U.  S.,  91  U.  S.  389,  23  L.  Ed.  237; 
Skelsey  v.  U.  S.,  23  Ct.  CI.  61;  Harvey  v.  U.  S.,  8  Ct.  CI.  501. 

*  People  ex  rel.  Graves  v.  Sohmer,  207  N.  Y.  450,  101  N.  E.  164;  State  v. 
Heath,  20  La.  Ann.  172,  96  Am.  Dec.  390. 

6  Long  Beach  Sch.  Dist.  v.  Dodge,  135  Cal.  401,  67  Pac.  499;  Sexton  v. 
Chicago,  107  111.  323;  Vincennes  v.  Cits.  G.  Co.,  132  Ind.  114,  31  N.  E.  573,  16 
L.  R.  A.  485;  Hudson  E.  L.  Co.  v.  Hudson,  163  Mass.  346,  40  N.  E.  109; 
Dausch  V.  Crone,  109  Mo.  323,  19  S.  W.  61;  Jersey  City  v.  Harrison,  71  N.  J.  L. 
69,  58  Atl.  100;  Horgan  v.  N.  Y.,  160  N.  Y.  516,  55  N.  E.  204;  Preston  v.  Syra- 
cuse, 92  Hun,  301,  158  N.  Y.  356,  53  N.  E.  39. 

135 


§  82  ]  CREATION  OF  THE  CONTRACT       [  PART  II 

there. ^  Governments  are  bound  to  observe  the  same  rule 
of  conduct  in  their  contractual  relations  with  their  citi- 
zens as  they  require  citizens  to  observe  with  each  other. ^ 
Accordingly  they  become  bound  by  their  contracts  the 
same  as  individuals.^ 

§  83.  Implied  Contracts — Defined  and  Classified. 

Public  contracts  may  be  express  or  implied  and  while 
liability  has  been  denied  under  the  theory  of  an  implied 
contract  arising  against  public  bodies,  the  non-liability 
exists  rather  because  under  the  particular  circumstances  a 
special  mode  of  contracting  was  provided  by  statute,  or 
certain  conditions  or  preliminaries  were  required  to  exist 
or  be  performed  before  a  contract  could  be  made  which  was 
otherwise  prohibited,  or  because  the  purpose  and  object 
of  the  contract  were  entirely  beyond  the  corporate  powers 
of  the  public  body.  Ordinarily,  public  bodies  when  acting 
within  their  corporate  powers  are  bound  on  implied  con- 
tracts the  same  as  individuals.  Implied  contracts  or 
quasi  contracts  are  obligations  created  by  law  without 
regard  to  the  assent  of  the  party  on  whom  the  obligation 
is  imposed.  They  are  not  contract  obligations  in  the  true 
sense,  but  are  constructive  contracts  created  by  law  and 
dictated  by  reason  and  justice.^  Implied  contracts  are 
divided  into  two  classes, — obhgations  impHed  in  fact  and 
obligations  implied  in  law.  The  former  are  based  upon  the 
actual  agreement  of  the  parties  which  is  deduced  from 
their  conduct  and  the  circumstances  of  the  case,  and  all 
the  elements  essential  to  an  express  contract  must  appear. 

1  Cooke  V.  U.  S.,  91  U.  S.  389,  23  L.  Ed.  237;  Danolds  v.  State,  89  N.  Y.  36, 
42  Am.  Rep.  277. 

2  State  V.  ClauBen,  94  Wash.  166,  162  Pac.  1;  State  v.  Maddough,  74  Wash. 
649,  134  Pac.  492. 

'  People  ex  rel.  Graves  v.  Sohmer,  supra. 

*  People  V.  Dummer,  274  lU.  637, 113  N.  E.  934;  Ward  v.  Kropf,  207  N.  Y.  467. 

136 


CHAP.  XIV  ]  DEFINITION    OF   CONTRACT  [  §  83 

The  latter  may  arise  without  there  having  been  a  promise 
or  any  intention  to  enter  into  a  contract,  and  even  against 
an  intention  to  the  contrary.^ 

While  implied  contracts  are  enforceable  at  law,  imphed 
contracts  in  fact  will  not  arise  from  mere  denials  and  con- 
tentions of  parties  but  from  their  common  understanding 
in  the  ordinary  course  of  business,  wherefrom  mutual  in- 
tent to  contract  without  formal  words  is  shown. ^  A  con- 
tract will  not  be  implied  where  an  express  contract  would 
be  contrary  to  law,^  nor  where  the  service  or  benefit  con- 
ferred has  been  given  as  a  gratuity,^  for  services  intended 
to  be  gratuitous  when  rendered,  may  not  afterwards  be 
used  as  a  basis  of  an  implied  promise  to  pay.^  A  contract 
may  not  be  imphed  in  fact  where  the  facts  are  inconsistent 
with  its  existence,  where  there  is  an  express  contract  con- 
cerning the  subject-matter,  or  where  an  express  contract 
would  be  contrary  to  law.^  And  where  a  party  is  incompe- 
tent to  make  an  express  contract,  such  incompetency  is 
equally  fatal  to  any  theory  of  implied  contract,^  for  if  one 
is  without  power  to  bind  by  express  contract,  clearly  he 
cannot  by  implication.  The  distinction  between  express 
contracts  and  imphed  contracts  lies,  not  in  the  nature  of 
the  undertaking,  but  in  the  mode  of  proof  .^ 

1  Highway  Commrs.  v.  Bloomington,  253  111.  164,  172,  97  N.  E.  280;  Under- 
bill V.  Rutland,  R.  R.  Co.,  90  Vt.  462,  475,  98  Atl.  1017;  Meade  County  v. 
Welch,  34  S.  D.  348,  148  N.  W.  601;  Milford  v.  Comm.,  144  Mass.  64,  10  N.  E, 
516;  Bigby  v.  U.  S.,  103  Fed.  597,  188  U.  S.  400,  47  L.  Ed.  519. 

2  Knapp  V.  V.  S.,  46  Ct.  CI.  601,  643. 

3  Zottman  v.  San  Francisco,  20  Cal.  96,  81  Am.  Dec.  96. 

*  Montgomery  County  Commrs.  v.  Ristine,  124  Ind.  242,  247,  24  N.  E.  990. 

6  Albany  v.  McNamara,  117  N.  Y.  168,  22  N.  E.  931. 

8  Miller  v.  Schloss,  218  N.  Y.  400,  113  N.  E.  337;  Creighton  v.  Toledo,  18 
Ohio  St.  447;  Hawkins  v.  U.  S.,  96  U.  S.  689,  24  L.  Ed.  607,  aff'g  12  Ct.  CI.  181; 
Hartman  v.  U.  S.,  40  Ct.  CI.  133;  Appleton  W.  Wks.  Co.  v.  Appleton,  132  Wis. 
563,  113  N.  W.  44. 

7  Curved  Electrotype  P.  Co.  of  N.  Y.  v.  U.  S.,  50  Ct.  CI.  258;  Beach  v.  U.  S., 
226  U.  S.  243,  260,  57  L.  Ed.  205,  aff'g  41  Ct.  CI.  110. 

8  Montgomery  v.  Montgomery  W.  W.  Co.,  77  Ala.  248,  254. 

137 


CHAPTER  XV 

OFFER   AND   ACCEPTANCE 

§  84.  Acceptance  of  Offer. 

In  public  contracts  as  in  contracts  between  individuals 
offer  and  acceptance  are  essential  elements  of  contract,^ 
An  acceptance  to  constitute  or  create  a  binding  contract 
must  correspond  to  the  offer  at  every  point  and  must 
conclude  the  agreement,^  and  the  acceptance  of  the  offer, 
to  be  effective,  if  no  time  is  fixed  in  the  offer,  must  be 
made  within  a  reasonable  time.^  The  acceptance  of  the 
offer  must  be  unconditioned  and  an  acceptance  which 
varies  from  the  offer  in  any  substantial  particular  is  in 
effect  a  rejection,  amounts  to  a  new  proposition  and  must 
be  accepted  in  turn.''  Silence  is  not  an  acceptance,  and  an 
offer  to  make  or  alter  a  contract  cannot  be  transformed 
into  an  agreement  because  the  public  body  makes  no 
reply.  Silence  will  not  be  taken  to  mean  voluntary  assent 
merely  because  there  is  no  dissent.^  To  make  a  binding 
agreement,  therefore,  there  must  be  an  acceptance  of  the 
offer  by  word  or  by  act  or  deed  and  it  must  accord  to  the 
terms  of  the  offer.  ^     An  acceptance  of  goods   sent  and 

1  U.  S.  V.  Carlin  Construction  Co.,  224  Fed.  859;  Curtis  v.  Portsmouth,  67 
N.  H.  506,  39  Atl.  439;  Jersey  City  v.  Harrison,  72  N.  J.  L.  185,  62  Atl.  765; 
Snow  Melting  Co.  v.  New  York,  88  N.  Y.  App.  Div.  575;  Landsdowne  v.  Cits. 
El.  L.  Co.,  206  Pa.  St.  188,  55  Atl.  919;  Kaukauna  E.  L.  Co.  v.  Kaukauna,  114 
Wis.  327,  89  N.  W.  542. 

^  U.  S.  V.  Carlin  Cons.  Co.,  supra. 

'  U.  S.  V.  Carlin  Cons.  Co.,  supra. 

*  Wheaton  Bldg.  Co.  v.  Boston,  204  Mass.  218,  90  N.  E.  598. 

'"  Beach  v.  U.  S.,  226  U.  S.  243,  57  L.  Ed.  205,  aff'g  41  Ct.  CI.  210;  Titcomb 
V.  U.  S.,  14  Ct.  CI.  263. 

*  Smith  V.  Nemaha  County  Sch.  Dist.,  17  Kan.  313;  Baldwin  v.  Comm.,  11 

138 


CHAP.  XV  ]       OFFER  AND  ACCEPTANCE  [  §  84 

their  use,^  or  of  materials  taken  by  a  county  to  repair  its 
roads  raises  an  implied  promise  to  pay  reasonable  value 
for  them.^  While  voluntary  services  rendered  without 
knowledge  or  request  do  not  make  an  agreement,  the  ac- 
ceptance of  services  under  circumstances  which  no  reason- 
able person  would  consider  a  benefaction  or  a  gratuity 
or  charity  will  imply  an  acceptance  and  a  promise  to 
pay.^  A  distinction  is  to  be  observed  between  an  ac- 
ceptance of  an  offer  and  an  authorization  to  some  agent 
of  a  public  body  to  enter  into  a  contract.  For  instance,  a 
landowner  offers  to  sell  his  land  to  a  public  body  at  a 
price  named  and  the  public  body  authorizes  and  em- 
powers its  chairman  to  purchase  on  terms  set  out  by  the 
public  body  in  its  authorization.  This  will  not  constitute 
an  acceptance  but  is  a  naked  authorization  to  buy,  which, 
of  course,  may  be  revoked  and  withdrawn.'*  But  if  a 
landowner  offers  to  sell  his  land  at  a  fixed  price  and  the 
public  officials  vote  to  purchase  it  at  that  price  this  will, 
on  the  other  hand,  constitute  a  complete  contract  and, 
upon  a  refusal  to  take,  resort  may  be  had  to  equity  for 
specific  performance.''  And  when  written  acceptance  is 
essential  to  a  binding  agreement,  the  entry  on  the  minutes 
of  the  council  coupled  with  written  acceptance  by  the 
contractor  suffices.^ 


Bush,  (Ky.),  417;  State  ex  rel.  Henderson  v.  State  Prison  Commrs.,  37  Mont. 
378,  96  Pac.  736;  Couch  v.  State,  14  N.  D.  361,  103  N.  W.  942. 

1  U.  S.  V.  Berdan  Mfg.  Co.,  156  U.  S.  552,  39  L.  Ed.  530,  aff'g  26  Ct. 
CI.  48. 

2  Harrison  v.  Palo  Alto  County,  104  Iowa,  383,  73  N.  W.  872. 
'Seagraves  v.  Alton,  12  lU.  371;  Albany  v.  McNamara,  117  N.  Y.  168,  22 

N.  E.  931;  Salsbury  v.  Phila.,  44  Pa.  St.  303. 

<  Madden  v.  Boston,  177  Mass.  350,  58  N.  E.  1024. 

5  McManus  v.  Boston,  171  Mass.  152,  50  N.  E.  607. 

9  Ft.  Madison  v.  Moore,  109  Iowa,  476,  80  N.  W.  527;  Aurora  W.  Co.  v. 
Aurora,  129  Mo.  540,  31  S.  W.  946;  McManus  v.  Boston,  supra;  Argus  Co.  v. 
Albany,  55  N.  Y.  495;  see  Curtis  v.  Portsmouth,  supra. 

139 


§  85  ]  CREATION   OF   THE    CONTRACT  [  PART  H 

§  85.  Acceptance  of  a  Proposal  which  Follows  Advertise- 
ment is  a  Contract. 
A  proposal  in  accordance  with  an  advertisement  by  a 
public  body  and  the  acceptance  by  the  pubHc  body  of  such 
proposal  create  a  contract  of  the  same  force  and  effect  as 
if  a  formal  contract  is  written  out  and  signed  by  the 
parties.  ^ 

§  86.  Offer — Terms  Implied  by  Law. 

As  in  contracts  there  are  many  terms  which  though  not 
actually  stated  therein  are  implied  by  law,  so  in  the 
offer  which  precedes  the  agreement  there  are  many  terms 
impUed  by  law  which  are  just  as  binding  as  if  actually  set 
out  in  the  oral  or  written  terms  of  the  contract.^  Indeed 
the  very  reason  that  they  bind  both  parties  after  accept- 
ance is  because  the  law  implies  them  in  the  offer.  Such 
terms  as  good  faith  and  fair  dealing,  that  neither  party 
will  do  anything  either  to  disable  or  prevent  himself  or  the 
other  party  from  performing,  that  existing  law  forms  a 
part  of  the  contract  and  is  incorporated  therein;  that  the 
work  will  be  commenced  and  completed  within  a  reason- 
able time,^  these  and  many  similar  terms  the  law  implies 
in  limine  in  every  mutual  undertaking  and  they  are 
implied  not  merely  in  the  making  of  the  contract  but  in 
the  performance  as  well.^  And  these  implied  obUgations 
are  as  much  a  part  of  the  offer  as  of  the  contract,  just  as 
if  incorporated  therein  by  express  language.^     Covenants 

1  Garfielde  v.  U.  S.,  93  U.  S.  242,  23  L.  Ed.  779;  U.  S.  v.  PurceU  Envelope 
Co.,  249  U.  S.  313,  63  L.  Ed.  620. 

2  U.  S.  V.  Bostwick,  94  U.  S.  53,  24  L.  Ed.  65. 

'  Gardner  v.  Town  of  Cameron,  155  N.  Y.  App.  Div.  750,  756;  Commrs.  of 
Highland  County  v.  Rhoades,  26  Ohio  St.  4li;  New  York  v.  Continental 
Asphalt  Co.,  163  N.  Y.  App.  Div.  486,  218  N.  Y.  685,  113  N.  E.  1052. 

5  U.  S.  v.  Bostwick,  94  U.  S.  53,  24  L.  Ed.  65. 

140 


CHAP.  XV  ]       OFFER  AND  ACCEPTANCE  [  §  87 

which  the  language  and  intent  of  the  parties  necessarily 
imply  will  also  be  supplied  to  effectuate  the  contract.'^ 
Where  a  public  body  advertised  for  bids  for  the  privilege 
of  picking  over  refuse  at  public  dumps,  the  law  neces- 
sarily imphes  a  covenant  by  the  public  body  to  deUver 
its  refuse  gathered  from  the  streets  at  those  dumps,  since 
such  covenant  is  indispensable  to  the  effectuation  of  the 
contract.  It  is  not  a  case  of  an  omission  by  the  parties 
which  the  courts  will  not  feel  justified  in  supplying,  but 
one  where  the  language  used  shows  that  an  additional,  or 
correlative  covenant  was  intended,  which  the  courts  should 
and  will  supply.^ 

§  87.  Bid  as  Offer. 

In  pubUc  contracts  the  offer  is  usually  adduced  in 
response  to  public  advertisement  requesting  bids  upon 
work  therein  specified.  The  legal  status  of  such  bids  is  in 
frequent  controversy.  A  mere  request  by  a  pubUc  body 
for  bids  to  do  work  is  not  an  offer  to  accept  the  bids 
submitted  in  response  to  such  advertisement  or  even  to 
accept  the  lowest  bid.  There  is  no  contract,  therefore, 
until  acceptance  by  the  public  body,  either  express  or 
impUed,  after  the  receipt  of  the  bid.  The  bid  of  the 
prospective  contractor  is,  of  course,  his  offer  and  if  ac- 
cepted by  the  pubhc  body  asking  for  bids,  before  it  is 
withdrawn,  makes  a  complete  and  binding  contract.^ 
And  where  a  formal  written  contract  is  desired,  it  must 
conform  substantially  to  the  terms  of  the  advertisement 
for  bids,  the  proposal  of  the  bidder,  and  its  acceptance; 

1  New  York  v.  Delli  Paoli,  202  N.  Y.  18,  94  N.  E.  1077;  Kinser  Cons.  Co.  v. 
State,  125  N.  Y.  S.  46,  145  N.  Y.  App.  Div.  41,  204  N.  Y.  381,  97  N.  E.  871. 
See  §§  158-159,  infra. 

2  New  York  v.  Delli  Paoli,  supra. 

3  North  Eastern  Cons.  Co.  v.  North  Hempstead,  121  N.  Y.  App.  Div.  187; 
Bull  V.  Talcott,  2  Root  (Conn.),  119,  1  Am.  Dec.  62. 

141 


§  87  ]  CREATION  OF  THE  CONTRACT       [  PART  II 

and  the  bidder  may  not  be  required  to  sign  a  written 
contract  which  contains  conditions  not  included  in  the 
offer  and  acceptance.  Neither  party  may  insist  upon  the 
introduction  of  stipulations  or  conditions  not  named  or 
implied  in  their  former  negotiations.^ 

§  88.  Negotiations  Preliminary  to  Contract. 

Negotiations  which  are  intended  merely  to  be  prelimi- 
nary to  a  formal  contract,  do  not  create  a  contract. 
Public  bodies  usually  seek  bids  by  advertisement.  Mere 
in\dtations  to  bid  are  not  offers  which  will  be  transformed 
into  a  contract  by  acceptance.  The  public  body  is  not 
obliged  to  accept  the  offer  or  make  a  contract  under  these 
circumstances.^  It  is  only  where  the  public  body  accepts 
the  bid  that  it  becomes  a  contract.^  It  is  the  contractor's 
bid  that  is  the  offer  and  its  acceptance  makes  the  con- 
tract.'* No  contract  can  arise  even  from  preliminary 
negotiations  which  result  in  an  oral  agreement  of  all 
the  terms,  where  the  contractor  as  well  as  the  public  body 
understand  it  is  not  to  be  binding  until  put  in  writing  and 
signed.  Where  proposals  and  an  award  look  to  the  future 
execution  of  a  contract,  such  award  is  not  an  agreement 
but  signifies  an  intention  to  make  one.^ 

Where  of  course  the  parties  reach  an  agreement  through 
correspondence,  intending  a  formal  writing  to  be  sub- 
sequently signed  expressing  it,  the  obligatory  character  of 
the   agreement   cannot   ordinarily   be   defeated   by   either 

'  Highland  Co.  Commrs.  v.  Rhoades,  26  Ohio  St.  411. 

2  Colorado  Paving  Co.  v.  Murphy,  78  Fed.  28,  37  L.  R.  A.  630;  Argenti  v. 
San  Francisco,  16  Cal.  256;  Smith  v.  New  York,  10  N.  Y.  504;  State  v.  Ohio 
Penitentiary,  5  Ohio  St.  234;  Anderson  v.  Public  School,  122  Mo.  61,  27  S.  W. 
610. 

»  Garfielde  v.  U.  S.,  93  U.  S.  242,  23  L.  Ed.  779;  Smith  v.  Mayor,  10  N.  Y.  504. 

*  Garfielde  v.  U.  S.,  supra. 

5  Edge  Moor  Bridge  Wka.  v.  Bristol  County,  170  Mass.  528,  49  N.  E.  918; 
Jersey  City  Water  Comm'rs  v.  Brown,  32  N.  J.  L.  504,  510. 

142 


CHAP.  XV  ]        OFFER  AND  ACCEPTANCE  [  §  89 

party  refusing  to  sign  such  formal  contract.  When  the 
minds  of  the  parties  have  met  upon  a  proposal  submitted 
by  one  and  accepted  by  the  other  party,  and  the  terms  of 
the  contract  have  been  in  all  respects  definitely  agreed 
upon,  one  of  the  parties  cannot  evade  or  escape  from  his 
obligation  by  refusing  to  sign  the  formal  writing  which 
both  parties  understood  was  to  be  subsequently  drawn  and 
executed.^  Clearly,  where  a  written  contract  eventually 
follows  these  preUminary  negotiations  it  merges  all  previ- 
ous negotiations  and  is  presumed  in  law  to  express  the 
final  undertaking  of  the  parties.^ 

§  89.  Meeting  the  Offer. 

An  offer  of  a  public  body  will  constitute  a  valid  contract 
between  such  pubhc  body  and  any  person  who  brings 
himself  within  the  provisions  of  the  offer.  ^  But  the  assent 
must  comprehend  the  whole  of  the  proposition.  It  must 
be  exactly  equal  to  its  extent  and  terms,  and  must  not 
qualify  them  by  any  new  terms.  A  proposal  to  accept 
or  an  acceptance  of  an  offer  on  terms  varying  those  pro- 
posals amounts  to  a  rejection  of  the  offer.  The  acceptance 
must  be  unconditional,  and  without  proviso.''  But  until 
an  offer  is  accepted  and  acted  upon  it  may  be  withdrawn 
or  modified.'"'  Where  an  offer  is  thus  withdrawn  it  no 
longer   outstands   to   be   the   subject   of   an   acceptance.^ 

1  U.  S.  V.  p.  J.  Carlin  Cons.  Co.,  224  Fed.  859;  Peirce  v.  Cornell,  117  N.  Y. 
App.  Div.  66.  See  Highland  County  Comm'rs  v.  Rhoades,  26  Ohio  St.  411; 
Jungdorf  v.  Little  Rice,  156  Wis.  466, 145  N.  W.  1092;  Joy  v.  St.  Louis,  138  U.  S. 
1;  Slade  v.  Lexington,  141  Ky.  214,  132  S.  W.  404. 

2  Simpson  v.  U.  S.,  172  U.  S.  372,  43  L.  Ed.  482,  aff'g  31  Ct.  CI.  217. 

»  Gardner  v.  Hartford,  14  Conn.  195;  Austin  v.  Supervisors,  24  Wis.  278. 

*  Baker  v.  Johnson  County,  37  Iowa,  186;  State  ex  rel.  Henderson  v.  Board  of 
State  Prison  Comm'rs.,  37  Mont.  378,  96  Pac.  736;  U.  S.  v.  P.  J.  Carlin  Cons. 
Co.,  224  Fed.  859;  McCotterv.  New  York,  37  N.  Y.  325;  North  Eastern  Cons. 
Co.'v.  North  Hempstead,  121  N.  Y.  App.  Div.  187. 

5  Foster  v.  Boston,  39  Mass.  33;  McCotter  v.  New  York,  supra. 

«  McCotter  v.  New  York,  supra. 

143 


§  89  ]  CREATION  OF  THE  CONTRACT       [  PART  II 

And,  of  course,  it  is  no  longer  open  when  it  is  rejected, 
or  when  the  time  limited  by  its  own  terms  has  expired,  ^  or 
in  the  absence  of  a  time  limited  for  acceptance,  after 
a  reasonable  time  has  elapsed. ^  Performance  is  of  course 
acceptance.  A  contingent  acceptance  does  not  bind  and 
Avill  not  prevent  a  withdrawal  of  the  ofifer.^ 

1  Haldane  v.  U.  S.,  69  Fed.  819;  Potts  v.  Whitehead,  20  N.  J.  Eq.  55,  23  Id- 

512. 

*  U.  S.  V.  P.  J.  Carlin  Cons.  Co.,  224  Fed.  859,  866. 
'  North  Eaatem  Cons.  Co.  v.  North  Hempstead,  supra. 


144 


CHAPTER  XVI 

OTHER  ELEMENTS  OF  CONTRACT 

§  90.  Validity  of  Contract. 

Contracts  of  public  bodies  when  ultra  vires  because 
illegal,  are  void,  and  no  recovery  may  be  had  on  them 
even  though  executed  and  the  benefits  of  performance 
are  retained  by  the  public  body.^  But  where  they  are 
ultra  vires  because  unauthorized,  although  they  are  void 
if  executory,  if  executed  and  the  public  body  retains  the 
benefits,  a  recovery  for  their  reasonable  value  so  far  as 
executed  will  be  sustained.^  Void  contracts  are  in  con- 
templation of  law  no  contracts  at  all  and  are  the  same  as 
if  no  agreement  had  been  undertaken.  Therefore  contracts 
in  violation  of  statute  will  be  void.  In  like  manner  and  for 
like  considerations  contracts  against  public  policy  ^  or 
obnoxious  to  good  morals  ^  are  void  and  unenforceable. 
Fraud  ^  will  also  vitiate  a  contract  as  will  duress,^  undue 
inHuence  or  mistake^  but  these  do  not  intrinsically  defeat 
the  contract  but  create  a  voidable  validity  only.    They  do 

1  Portland  v.  Bitum.  Pav.  Co.,  33  Oreg.  307,  52  Pac.  28. 

2  Berka  v.  Woodward,  125  Cal.  119,  57  Pac.  777;  Bay  v.  Davidson,  133  Iowa, 
688,  111  N.  W.  25. 

3  U.  S.  V.  Cocke,  207  Fed.  682;  Patterson  v.  Chambers  P.  Co.,  81  Oreg.  328, 
159  Pac.  568. 

*  Thompson  v.  St.  Charles  County,  227  Mo.  220,  126  S.  W.  1044. 

6  Bd.  Water  Comm'rs  v.  Robbins,  72  Conn.  623,  74  Atl.  938;  Richards  v. 
Sch.  Tp.  of  Jackson,  132  Iowa,  612,  109  N.  W.  1093;  Baird  v.  New  York,  96 
N.  Y.  567. 

8  Harrison  Tp.  v.  Addison,  176  Ind.  389,  96  N.  E.  146;  Memphis  v.  Brown, 
20  Wall.  289,  307,  22  L.  Ed.  264;  Koewing  v.  West  Orange,  89  N.  J.  L.  539, 
99  Atl.  203. 

7  Griffith  V.  Sebastian  County,  49  Ark.  24,  3  S.  W.  886;  State  v.  Paup,  13 
Ark.  129. 

145 


§  90  ]  CREATION  OF  THE  CONTRACT       [  PART  II 

not  destroy  the  contract  but  may  be  availed  of  to  defeat  it. 
On  the  other  hand,  the  party  injured  may  affirm  the  con- 
tract and  sue  for  the  damages  which  he  has  suffered  be- 
cause of  the  existence  or  imposition  of  any  of  these  vitiat- 
ing facts  or  conditions.  Where  the  fraud  complained  of  is 
in  the  execution  of  the  contract,  it  may  be  avoided  at  law, 
since  the  assent  necessary  to  constitute  a  binding  contract  is 
lacking.  Fraud  in  the  consideration,  however,  is  usually 
only  the  subject  of  cognizance  by  a  court  of  equity  in  order 
to  have  relief  from  the  contract,  since  in  this  class  of  cases 
there  is  assent  both  to  the  contract  and  its  execution,  but 
there  is  deceit  with  reference  to  the  value  or  character  of 
the  consideration  received.  Mistake  as  to  the  law  or  ig- 
norance of  the  law  will  not  excuse.  Every  one  is  presumed 
to  know  the  law.  But  this  presumption  does  not  accord 
with  fact.  No  one  can  know  all  the  law,  and  some  know 
very  httle.  The  presumption  is,  however,  essential  for 
government  to  endure.  Otherwise  the  greater  the  igno- 
rance of  law  the  greater  would  be  the  license  to  violate 
it.^  It  has  been  said,  however,  that  while  ignorance  of  the 
law  is  not  a  vahd  excuse,  contractors  engaged  in  work  over 
the  country  cannot  be  expected  to  be  familiar  with  every 
detail  of  city  and  town  charters,  and  where  an  honest 
mistake  was  made  in  attempting  to  comply  with  the  city 
charter,  and  no  damage  resulted,  recovery  would  be  allowed 
so  far  as  a  contract  was  executed.^ 

But  while  mistakes  as  to  law  will  not  relieve  a  contrac- 
tor or  a  public  body  for  liability  for  his  act,  in  cases  where 
intent  or  good  faith  is  the  issue,  the  party's  knowledge  of 
the   law   may  be  material.^     When    the    mistake  is  not 

» Knowles  v.  New  York,  176  N.  Y.  430,  438,  68  N.  E.  860. 
2  Konig  V.  Baltimore,  128  Md.  465,  97  Atl.  837. 

'  Knowles  v.  New  York,  supra,  at  page  439;  U.  S.  v.  Realty  Co.,  163  U.  S.. 
427,  41  L.  Ed.  215. 

146 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  91 

mutual,  and  a  contractor  in  making  his  bid  overlooks  a 
part  of  the  proposed  contract  work,  since  he  has  not  been 
led  into  error  by  anything  said  or  done  by  the  other  party, 
he  is  remediless.^  Wlien  a  provision  or  stipulation  in  a 
contract  has  no  obvious  meaning,  or  is  reasonably  capable 
of  diverse  interpretation  and  in  fact  is  differently  under- 
stood by  the  parties,  there  is  no  agreement.^  But  where 
there  is  simply  a  misconception  in  the  interpretation  of  the 
language  of  a  contract  or  specifications  and  of  its  effect 
this  is  not  a  mistake  of  fact,  but  one  of  law,  against  which 
the  courts  afford  no  remedy.^  But  a  court  of  equity  will 
reUeve  against  a  mistake  of  fact  superinduced  by  a  mistake 
of  law.^  The  vahdity  of  public  contracts  is  generally  pre- 
sumed since  public  officers  who  make  them  are  presumed 
to  act  within  the  limits  of  their  authority  in  good  faith, 
and  for  the  best  interests  of  the  public  body  they  repre- 
sent.^ 

§  91.  Essential  Elements  of  Contract. 

To  create  a  valid  pubhc  contract,  there  must  be  author- 
ity to  make  it;^  it  must  relate  to  a  subject-matter  within 
the  scope  of  the  corporate  powers  of  the  pubhc  body,^ 
and  of  course  must  be  upon  sufficient  consideration.^ 
Mutuahty  of  contract  is  also  an  essential  element.^  The 
parties  must  agree  upon  all  the  terms  and  conditions  of 

1  American  Water  Softener  Co.  v.  U.  S.,  50  Ct.  CI.  209. 

2  Wheaton  Bldg.  &  Lumber  Co.  v.  Boston,  204  Mass.  218,  90  N.  E.  598. 
'  Wheaton  B.  &  L.  Co.  v.  Boston,  supra. 

« Griffith  V.  Sebastian  County,  49  Ark.  24,  3  S.  W.  886. 

5  Reed  v.  Anoka,  85  Minn.  294,  88  N.  W.  981;  Memphis  v.  Brown,  20  Wall. 
(U.  S.)  289,  22  L.  Ed.  264;  Lincoln  v.  Sun  Vapor  Street  L.  Co.,  59  Fed.  757, 
760;  Brown  v.  Bd.  of  Education  of  Pomona,  103  Cal.  531,  37  Pac.  503. 

8  Bosworth-Chanute  Co.  v.  Brighton,  272  Fed.  964. 

^  See  cases,  §  58,  ante. 

8  U.  S.  V.  Cooke,  207  Fed.  682,  687. 

9  New  York  v.  Delli  Paoli,  202  N.  Y.  18,  94  N.  E.  1077;  U.  S.  v.  McMullen. 
222  U.  S.  460,  56  L.  Ed.  269;  Toomey  v.  Bridgeport,  79  Conn.  229,  64  Atl.  215, 

147 


§  91  ]  CREATION   OF  THE   CONTRACT  [  PART  II 

the  contract,  and  their  minds  must  meet  upon  its  terms 
and  subject-matter.^  If  any  part  remains  to  be  settled, 
the  agreement  is  incomplete.-  They  must  agree  upon  plans 
and  specifications  which  are  definite  and  certain,  as  to 
kinds,  quahty  and  character  of  materials  and  workman- 
ship, the  time  of  completion,  the  price  and  method  of  pay- 
ments. If  these  are  not  definitely  settled,  no  intelligible 
contract  can  result  and  the  parties  are  without  remedy 
against  each  other.  Accordingly,  the  language  of  the 
agreement  in  relation  to  these  and  other  matters  of  the 
contract  must  be  so  clear  and  intelligible  as  to  make  the 
contract  capable  of  being  performed.^  The  meaning  and 
intent  of  the  pubUc  body  and  its  contractor  must  be  ca- 
pable of  ascertainment  from  the  language  used  to  a  rea- 
sonable degree  of  certainty.''  Where  there  is  an  irreconcil- 
able conflict  between  essential  provisions  of  the  assumed 
contract  for  pubUc  work  and  the  specifications,  and  the 
latter  cannot  be  ignored,  the  contract  will  be  void  for  un- 
certainty and  cannot  be  enforced.^  Where,  accordingly,  an 
owner  of  land  offers  to  sell  all  his  land  on  an  island  to  a 
public  body  which  accepts  by  offering  to  buy  all  lands  on 
the  island  which  has  many  ownerships,  there  is  no  meeting 
of  the  minds.*  Where  the  price  is  not  fixed  the  contract  is 
incomplete  and  there  remains  an  essential  element  still  to  be 
negotiated.^    Where  a  method  of  fixing   the   price  by  two 

1  People's  Railroad  v.  Memphis  Railroad,  10  Wall.  (U.  S.)  38,  19  L.  Ed.  844, 
aff'g  4  Colflw.  406;  McCotter  v.  New  York,  37  N.  Y.  325. 

2  McCotter  v.  New  York,  supra. 

'  Lyle  V.  Jackson  County,  23  Ark.  63. 

*  U.  S.  V.  Ellicott,  223  U.  S.  524,  56  L.  Ed.  535;  U.  S.  v.  McMuUen,  222 
U.  S.  460,  56  L.  Ed.  269;  Long  v.  Battle  Creek,  39  Mich.  323,  33  Am.  R.  384; 
Wheaton  Bldg.  &  L.  Co.  v.  Boston,  204  Mass.  218,  90  N.  E.  598;  Eugene  v. 
Chambers  P.  Co.,  81  Oreg.  352,  159  Pac.  576;  Patterson  v.  Chambers  Power 
Co.,  81  Oreg.  328,  159  Pac.  568. 

6  U.  S.  V.  Ellicott,  supra. 

»  McCotter  i;.  New  York,  supra. 

'  Idem. 

148 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  92 

arbitrators  is  suggested  in  the  offer,  the  additional  term  in 
the  acceptance  that  if  they  cannot  agree,  a  third  arbitrator 
shall  be  called  in,  prevents  a  meeting  of  the  minds  and 
therefore  a  contract.^ 

§  92.  Delivery  Essential. 

To  create  a  binding  written  contract,  there  must  be  a 
deUvery  of  the  instrument  expressing  it.^  The  delivery, 
however,  is  no  part  of  the  contract  and  is  not  proved  by  it. 
Delivery  is  an  act  done  in  reference  to  the  contract  and  is 
indispensable  to  give  it  efficacy.  The  act  of  delivery  inter- 
venes between  the  execution  of  the  contract  and  the  time 
when  it  becomes  operative.  Proof  of  delivery,  accordingly, 
is  usually  to  be  established  by  parol  and  it  is  a  question 
of  fact  to  be  determined  from  all  the  conflicting  evidence 
in  the  case.^  Delivery  may,  however,  be  upon  condition. 
And  the  annexing  of  conditions  to  delivery  is  not  an  oral 
contradiction  of  the  writing.  There  must  be  a  deUvery  to 
make  the  writing  binding  in  any  degree,  and  the  extent 
that  it  shall  have  effect  and  bind  the  parties,  may  be 
limited  by  the  conditions  annexed  to  its  delivery.  DeUvery 
may  sometimes  be  complete  upon  acceptance  in  accord- 
ance with  modes  recognized  in  commercial  business.  It  is  a 
universal  rule  that  when  an  offer  is  made  by  one  person  to 
another  the  minds  of  the  parties  meet  and  a  contract  is 
deemed  to  be  concluded,  when  such  offer  is  accepted  in  a 
reasonable  time,  either  by  telegram  duly  sent  in  the  ordi- 
nary way  or  by  letter  duly  posted  to  the  proposer,  as  long 
as  either  is  done  before  a  withdrawal  of  the  offer  to  the 
knowledge  of  the  acceptor.^ 

*  Idem. 

2  Blanchard  v.  Blackstone,  102  Mass.  343. 

'  Springfield  v.  Harris,  107  Mass.  532. 

'  Burton  v.  U.  S.,  202  U.  S,  344,  384,  50  L.  Ed.  1057;  2  Kent  Comm.  477. 

149 


§  93  ]  CREATION   OF   THE   CONTRACT  [  PART  II 

§  93.  Assent. 

The  acceptance  which  will  create  a  valid  and  binding 
contract  is  one  which  is  unequivocal,  unconditional  and 
unvarying  from  the  offer.  The  assent  of  the  parties  to 
the  terms  and  subject-matter  of  the  contract  must  be 
mutual,  and  they  must  assent  to  the  same  thing  in  the 
same  sense.  Absolute  acceptance,  therefore,  of  an  offer 
coupled  by  any  quahfication  or  condition  will  not  consti- 
tute a  completed  contract  because  there  is  lacking  this 
essential  mutuality  of  assent.^ 

If  parties  intend  to  contract  orally  and  there  is  a 
misunderstanding  as  to  the  terms,  neither  is  bound  because 
their  minds  have  not  met.  Where  the  contract  is  written 
and  similar  misunderstanding  arises,  a  court  of  equity  will 
refuse  to  enforce  it.-  But  misunderstanding  of  terms  not 
capable  of  reasonable  misconstruction  will  not  obviate  the 
contract.  Error  in  interpretation,  or  misconception  of  the 
legal  effect  of  language,  cannot  avoid  it.^  A  contract  is  not 
concluded  so  long  as  in  contemplation  of  both  parties  to  it, 
something  remains  to  be  done  to  establish  contract  relations. 
The  law  does  not  make  a  contract  when  the  parties  intend 
none,  nor  regard  an  arrangement  as  completed  which  the  par- 
ties to  it  regard  as  incomplete.^  Nor  does  it  compel  assent  to 
a  contract  composed  of  several  instruments  which  are  in  irre- 
concilable conflict,  and  none  of  which  may  be  disregarded.^ 
There  may,  however,  be  assent  to  a  contract  without  full 

1  State  ex  rel.  Henderson  v.  Bd.  of  State  Prison  Commrs.,  37  Mont.  378,  96 
Pac.  736;  Lord  &  Hewlett  v.  U.  S.,  217  U.  S.  340,  54  L.  Ed.  790,  aff'g  43  Ct.  CI. 
282;  U.  S.  V.  P.  J.  Carlin  Cons.  Co.,  224  Fed.  859;  Tilley  v.  County  of  Cook, 
103  U.  S.  155,  26  L.  Ed.  374. 

2  Scott  V.  U.  S.,  12  Wall.  443,  445;  Hume  v.  U.  S.,  132  U.  S.  406,  33  L.  Ed. 
393,  aff'g  21  Ct.  CI.  328. 

» Wheaton  Bldg.  &  Lum.  Co.  v.  Boston,  204  Mass.  218,  90  N.  E.  598. 
*  Central  Bitulithic  Pav.  Co.  v.  Vil.  of  Highland  Park,  164  Mich.  223,  129 
N.  W.  46. 

5  U.  S.  V.  Ellicott,  223  U.  S.  524,  56  L.  Ed.  535. 

150 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  94 

knowledge  of  its  terms,  as  where  a  contractor,  who  has  an 
opportunity  to  read  a  contract  before  signing  it,  executes  it. 
He  cannot,  except  where  the  contents  of  the  writing  itself  are 
misrepresented  to  him,  escape  the  obligation  of  his  contract 
b}^  showing  that  he  signed  the  contract  without  reading  it.^ 
A  contractor  is  presumed  to  know  what  he  signs. ^ 

§  94.  Reality  of  Assent. 

If  a  contract  is  entered  into  because  of  the  assumed 
existence  of  certain  facts,  which  do  not  in  reality  exist, 
no  contract  arises.  In  such  event  the  contract  is  nullified 
in  its  inception  by  the  non-existence  of  material  facts 
which  constituted  at  once  its  inducement  and  the  founda- 
tion of  all  negotiations.  Mistake  as  to  such  excludes  real 
assent,  and  the  possibility  of  a  meeting  of  minds. ^  Courts 
of  equity  under  such  circumstances  frequently  decree  the 
surrender  and  cancellation  of  agreements.*  And  in  addi- 
tion a  recovery  is  allowed  for  what  has  been  done  under 
the  contract  so  far  as  executed.-^  If  the  contract  is  exec- 
utory and  the  contractor  refuses  to  proceed  with  per- 
formance for  such  reasons  he  may  defend  an  action  by 
the  public  body  and  set  up  the  lack  of  real  assent.  Where 
the  mistake  is  unilateral  and  is  induced  by  no  fraud, 
concealment  or  inequitable  conduct  of  the  other  party  and 
the  true  state  of  facts  could  be  ascertained  by  ordinary 
diligence  on  the  part  of  the  mistaken  party,  equity  will 
not  relieve.  Equity  only  assists  the  vigilant.  Conscience, 
good  faith  and  reasonable  diligence  are  necessary  to  rouse 
a  court  of  equity  to  action. 

1  Stone  V.  Prescott  Spec.  Sch.  Dist.,  119  Ark.  553,  178  S.  W.  399. 

2  People  V.  Dunbar  Cont.  Co.,  215  N.  Y.  416,  424,  109  N.  E.  554. 

3  Griffith  V.  Sebastian  County,  49  Ark.  24,  3  S.  W.  886;  Long  v.  Athol,  196 
Mass.  497,  82  N.  E.  665;  U.  S.  v.  Charles,  74  Fed.  142. 

•*  U.  S.  V.  Charles,  supra;  Long  v.  Athol,  supra. 

^  Long  V.  Athol,  supra.    See  Hayes  v.  Nashville,  80  Fed.  641. 

151 


§  94  ]  CREATION   OF    THE   CONTRACT  [  PART  II 

"VNTiere,  however,  the  true  state  of  facts  could  only  be 
revealed  by  careful  and  accurate  scaling  of  maps  and 
drawings  and  by  processes  of  computations  by  specially 
skilled  persons,  the  failure  to  follow  such  course  will  not 
be  such  negligence  as  will  deny  relief.  Such  would  not 
be  ordinary  but  extraordinary  diligence.^  And  in  some 
instances  equity  may  rescind  an  apparent  contract  for  the 
mistake  of  one  party  only,  without  a  finding  of  fraud  or 
inequitable  conduct  in  the  other. ^ 

§  95.  Mutuality  Essential. 

Where  reciprocal  promises  are  not  equally  obligatory 
upon  each  of  the  parties,  the  agreement  is  nudum  pactum 
and  void  for  want  of  mutuality.  Where  one  of  the  parties 
is  not  bound  to  do  anything  there  is  a  lack  of  mutuahty 
which  makes  the  agreement  void.^  But  merely  because 
one  party  to  a  contract  has  a  privilege  or  right  which  the 
other  party  has  not  is  not  want  of  mutuality.^  Therefore, 
a  privilege  to  a  town,  under  a  contract  to  purchase  water 
works,  to  inspect  the  books  and  vouchers  of  the  water 
company,  even  though  it  might  not  exercise  its  right  to 
purchase,  will  not  make  it  unmutual.^  But  if  one  party 
only  is  bound  to  perform,  this  is  a  clear  instance  of  want 
of  mutuality.^  However,  there  are  cases  where,  although 
exact  words  are  wanting  to  bind  a  public  body  to  do  its 

^  Long  V.  Athol,  supra. 

2  Harper  v.  Newburgh,  159  N.  Y.  App.  Div.  695;  New  York  v.  Dowd  Lumber 
Co.,  140  N.  Y.  App.  Div.  358;  Moffett  &  Co.  v.  Rochester,  178  U.  S.  373,  44 
L.  Ed.  1108. 

3  Farrell  v.  County  of  Greenlee,  15  Ariz.  106,  136  Pac.  637;  Taber  v.  Dallas 
County,  101  Tex.  241,  106  S.  W.  332;  Storm  v.  U.  S.,  94  U.  S.  76;  State  ex  rel. 
V.  Holcomb,  46  Neb.  612,  65  N.  W.  873. 

*  Mayor  of  Boonton  v.  United  W.  S.  Co.,  88  N.  J.  Eq.  61,  102  Atl.  454,  84 
N.  J.  Eq.  197,  93  Atl.  1086,  83  N.  J.  Eq.  536,  91  Atl.  814. 
^  Mayor  of  Boonton  v.  United  W.  S.  Co.,  supra. 
'  Harley  v.  Chicago  San.  Dist.,  107  111.  App.  546. 

152 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  96 

part  under  a  contract,  the  courts  will  imply  a  covenant  to 
perform  which  the  language  used  by  the  parties  shows  was 
intended  as  indispensable  to  effectuation  of  the  contract. 
Under  such  covenant  thus  necessarily  implied  each  party 
to  the  contract  would  have  mutuality  of  remedy.^ 

Reservations  in  public  contracts  to  annul  or  change 
contracts  involve  sometimes  the  question  of  mutuahty. 
The  reserved  right  on  the  part  of  one  party  to  terminate 
a  contract  will  not  destroy  the  mutuality  of  a  contract, 
since  it  is  simply  an  option  which  the  parties  contract 
with  reference  to,  and  which  may  or  may  not  be  exercised.^ 
Such  a  provision  to  terminate  or  annul  a  contract  is 
frequently  found  in  public  contracts.  In  like  manner,  a 
reserved  power  to  change  details  is  often  provided.  Where 
such  exists,  it  does  not  create  a  lack  of  enforceability  of 
contract  because  of  want  of  certainty  or  mutuality, 
especially  where  there  are  provisions  for  ascertaining  a 
change  in  compensation  should  any  change  in  contract  be 
deemed  proper.^  This  principle  of  mutuality  of  contract 
does  not  apply  to  executed  contracts.  Where  one  party 
has  actually  received  the  consideration  of  a  written  con- 
tract, it  is  no  defense  to  an  action  brought  against  him 
for  breach  of  his  covenants  to  assert  that  the  agreement 
did  not  bind  his  adversary  to  perform  his  promises,  as  long 
as  it  appears  that  the  latter  did  in  fact  perform  such 
promises  in  good  faith  and  without  prejudice.^ 

§  96.  Definiteness  and  Certainty  are  Essential. 

Public  contracts  to  be  valid  and  enforceable  must  be 
definite  and  certain  both  as  to  the  character  and  extent 

1  New  York  v.  Delli  Paoli,  202  N.  Y.  18,  94  N.  E.  1077. 

2  Taber  v.  Dallas  County,  sujyra. 

3  U.  S.  V.  McMuUen,  222  U.  S.  460,  56  L.  Ed.  269. 
^  Storm  V.  U.  S.,  94  U.  S.  76,  83,  24  L.  Ed.  42. 

153 


§  96  ]  CREATION  OF  THE  CONTRACT       [  PART  II 

of  the  obligations  and  duties  which  each  party  must  render 
to  the  other  thereunder.^  But  if  there  is  a  patent  ambigu- 
itj'  merely  in  one  clause  of  a  contract  which  renders  it 
void  for  uncertainty,  the  nullity  of  such  clause  will  not 
affect  the  remainder  of  the  instrument,  if  enough  is  left  to 
constitute  a  complete  contract.^  And  where  the  parties 
leave  to  the  court  by  the  very  terms  of  a  contract  to 
provide  what  regulations  and  what  fair  and  equitable 
compensation  should  be  paid  thereunder,  such  a  contract 
is  neither  void  for  uncertainty  or  for  want  of  mutuality.^ 
Renewal  contracts  are  oftentimes  the  subject  of  suit  where 
the  compensation  during  the  extension  period  is  to  be 
fixed  by  agreement  or  by  arbitrators,  and  where  one  of  the 
parties  will  neither  agree  nor  appoint  arbitrators,  the 
courts  will  undertake  to  carry  out  and  enforce  the  pro- 
visions of  the  contract  in  such  regard.^  A  contract  is  not 
void  for  uncertainty  merely  because  no  definite  term  of 
duration  is  fixed,  as  long  as  some  act  or  event  is  made  the 
period  of  expiration.  Such  an  uncertainty  will  not  render 
the  contract  terminable  at  will.^  Nor  will  a  contract  be 
void  for  want  of  certainty  as  to  the  terms  of  compensation 
thereunder,  if  such  compensation  is  capable  of  being 
rendered  certain  by  reference  to  a  standard  pro\aded  in 
the  contract.  That  is  certain  which  may  be  rendered 
certain.^  But  an  agreement  by  a  school  trustee  to  pay 
good  wages  is  too  indefinite  and  uncertain  to  support  an 
action.^    The  language  of  the  contract  must,  however,  be 

1  Lyle  V.  Jackson  County,  23  Ark.  63;  Atkins  v.  Van  Buren  Sch.  Tp.,  77 
Ind.  447;  Long  v.  Battle  Creek,  39  Mich.  323. 

estate  t;.  Racine  Sattley  Co.,  134  S.  W.  (Tex.)  400. 

5  Joy  V.  St.  Louis,  138  U.  S.  1,  34  L.  Ed.  843. 

*  Slade  V.  Lexington,  141  Ky.  214,  132  S.  W.  404.    See  Joy  v.  St.  Louis,  supra. 

'  Superior  t^.  Douglas  County  Tel.  Co.,  141  Wi.s.  363,  122  N.  W.  1023. 

« Caldwell  v.  School  Dist.  Lake  County,  55  Fed.  372. 

'  Fairplay  Sch.  Tp.  v.  O'Neal,  127  Ind.  95,  26  N.  E.  686. 

154 


CHAP.  XVI  ]   OTHER  ELEMENTS  OF  CONTRACT        [  §  97 

such  as  when  interpreted  makes  a  contract  capable  of 
performance.  A  building  contract  should  at  least  permit 
of  the  erection  of  a  building  of  known  dimensions  to 
possess  that  certainty  which  will  call  for  enforcement.^ 
The  meaning  of  a  contract  must  of  course  be  capable  of 
ascertainment  to  be  sustained.-  But  even  if  it  be  phys- 
ically impossible  to  construct  a  building  according  to  plans 
and  specifications,  and  if  ordinarily  such  a  situation  might 
admit  of  recovery  on  quantum  meruit  for  work  done,  this 
is  not  permissible  where  it  would  exceed  a  fixed  sum 
authorized  to  be  expended  about  which  there  was  no 
uncertainty.^ 

§  97.  Consideration. 

A  promise  is,  of  course,  a  good  consideration  for  a 
promise.  A  seal  will  import  a  consideration  or  at  any 
rate  render  proof  of  it  unnecessary.  But  when  not  under 
seal,  every  contract  must  have  a  consideration  to  support 
it.  Inadequacy  of  consideration,  in  the  absence  of  fraud 
or  undue  influence,  does  not  destroy  the  obligation  of  the 
contract.  Any  benefit  or  advantage  accruing  to  the  party 
making  a  promise,  or  any  loss  or  disadvantage  incurred  by 
the  party  for  whose  benefit  the  promise  is  made,  will  be 
a  sufficient  consideration.  Of  course,  if  a  consideration 
wholly  fails  the  promise  cannot  be  enforced.^  Where  a 
party  is  under  obligation  of  law  to  do  something  and  he 
requires  something  additional  to  be  done  or  paid  before  he 
will  perform  what  is  already  his  legal  duty,  a  contract 
made  or  given  under  such  circumstances  is  wholly  without 

1  Lyle  V.  Jackson  County,  23  Ark.  63. 

2  U.  S.  V.  Ellicott,  223  U.  S.  524,  56  L.  Ed.  535;  U.  S.  v.  McMuUen,  222  U.  S. 
460,  56  L.  Ed.  269;  Long  v.  Battle  Creek,  39  Mich.  323. 

3  Turney  v.  Bridgeport,  55  Conn.  412,  12  Atl.  520. 

*  State  V.  lUyes,  87  Ind.  405;  Scott  v.  U.  S.,  12  Wall.  443;  Hume  v.  U.  S., 
132  U.  S.  406. 

155 


§  97  ]  CREATION  OF  THE  CONTRACT       [  PART  11 

consideration.  1  The  doing  of  what  one  is  already  bound  to 
do  upon  a  further  promise  or  obhgation,  makes  the 
promise  or  obhgation  without  consideration.  Where  a  duty 
accordingly  is  expressly  imposed  by  law  upon  a  pub- 
He  official  and  no  fee  or  other  compensation  therefor  is 
allowed  by  law,  no  audit  or  allowance  of  such  a  claim  can 
be  made  and  an  agreement  to  pay  extra  compensation 
creates  no  binding  obhgation,  ^  and  this  is  true  whether 
the  extra  compensation  is  or  is  not  forbidden  by  law.^  The 
question  often  arises  again  in  connection  with  the  per- 
formance of  public  contracts,  where  a  contractor  with  a 
public  body  having  entered  into  a  contract  and  upon  its 
performance  refuses  to  further  perform,  unless  given  an 
increased  compensation.  If  in  such  circumstances  the 
pubUc  body  promises  an  increased  price  to  induce  the 
contractor  to  continue  performance,  the  latter  promise  is 
founded  upon  a  valuable  consideration.''  The  theory  upon 
which  a  consideration  seems  to  be  worked  out  is  that  a 
contractor  has  the  legal  right  on  general  principles  to 
violate,  abandon  or  renounce  his  contract  upon  the  usual 
terms  of  compensation  to  the  other  for  damages  which  the 
law  recognizes  and  allows,  and  this  right  is  universally 
recognized  and  acted  upon.-^  If  the  contractor  waives  this 
right  to  stop  and  pay  damages,  the  waiver  of  such  right 
will  support  the  new  promise,  if  this  be  a  new  contract.^ 
There  is  no  rule  of  law  which  hinders  a  public  body 

1  McCook  County  v.  Burstad,  30  S.  D.  266,  138  N.  W.  303. 

2  Wadsworth  v.  Bd.  of  Supervisors,  217  N.  Y.  484,  499,  112  N.  E.  161. 

'  Wad.sworth  v.  Bd.  of  Supervisors,  supra;  McCook  County  v.  Burstad, 
supra;  Rochester  v.  Campbell,  184  Ind.  421,  111  N.  E.  420. 

*  U.  S.  V.  Cooke,  207  Fed.  682,  688;  Parrott  v.  Mexican  C.  R.  Co.,  207  Mass. 
184,  93  N.  E.  590;  Domenico  v.  Alaska  Packers'  Assn.,  112  Fed.  554,  557; 
Rowe  V.  Peabody,  207  Mass.  226,  93  N.  E.  604. 

6  Lord  V.  Thomas,  64  N.  Y.  107. 

«  Lattimore  v.  Harsen,  14  Johns.  330;  Vanderbilt  v.  Schreyer,  92  N.  Y.  392, 
402;  Abbott  v.  Doane,  163  Mass.  433,  40  N.  E.  197;  Rowe  v.  Peabody,  supra. 

156 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  98 

having  power  to  make  a  public  improvement,  and  inci- 
dentally the  power  to  contract  for  doing  the  work, 
from  increasing  the  contract  price,  under  circumstances, 
equitably  justifying  it,  unless  prohibited  from  doing  so  in 
its  charter.^ 

An  agreement  to  pay  more,  or  to  pay  less,  or  to  alter 
or  modify  the  terms  of  an  existing  parol  agreement  made 
under  the  circumstances  indicated  constitutes  a  valid  new 
contract.  Of  course,  the  intent  of  the  parties  as  to  what 
the  new  agreement  is  will  control.  If  the  agreement  is 
made  in  consideration  of  the  new  promise,  it  is  binding 
when  made.  If  the  agreement  is  in  consideration  of  the 
performance  of  the  promise,  then  the  agreement  is  only 
binding  as  it  becomes  executed.  An  accord  is  reached 
when,  in  any  case,  the  agreement  between  the  parties  is 
complete.  And  in  the  case  of  change  in  a  contract  under 
seal,  the  modification  being  by  parol,  it  is  only  valid  if 
executed,  but  not  if  executory.  But  this  latter  rule  does 
not  prevent,  either  under  the  common  law  or  now,  the 
modification  of  a  valid  executory  parol  agreement  by  a 
new  executory  parol  agreement.^ 

§  98.  Fraud  Avoids  a  Contract. 

A  contract  procured  through  fraud  is  voidable,  not  void, 
and  unless  tainted  by  illegality  or  contrary  to  public  policy 
it  may  be  subsequently  ratified.^  Fraud  when  charged 
must  be  proved  and  is  not  presumed.^  Where  fraud  may 
even  be  found  to  exist  in  the  making  of  a  contract,  it  may 
not  be  avoided  on  that  ground  if,  after  knowledge  of  the 

1  Meech  v.  Buffalo,  29  N.  Y.  198,  214;  Atlantic  City  v.  Warren  Bros.,  226 
Fed.  372;  Rowe  v.  Peabody,  supra.    See  Gordon  v.  State,  233  N.  Y.  1. 

2  See  §§  165,  309,  post. 

3  Richards  v.  School  Tp.  of  Jackson,  132  Iowa,  612,  109  N.  W.  1093. 
"  Baird  v.  Mayor,  96  N.  Y.  567,  593. 

157 


§  98  ]  CREATION    OF   THE    CONTRACT  [  PART  II 

fraud,  the  public  body  accepts  and  retains  the  property 
delivered  under  the  contract.  This  rule  applies  to  public 
corporations,  the  same  as  to  private  individuals.^  It  is  the 
duty  of  all  parties  who  have  been  induced  to  enter  into 
the  making  of  an  executory  contract  for  the  purchase  of 
property,  through  fraud,  if  they  desire  to  avail  themselves 
of  such  objection,  to  act  upon  the  first  opportunity  and 
rescind  it  by  repudiating  its  obligations  and  restoring 
whatever  has  been  received  under  it  immediately  upon 
discovering  the  alleged  fraud.  If  they  delay  acting,  and 
retain  the  property  delivered  beyond  a  reasonable  time 
to  act,  or  accept  performance  after  such  discovery,  they 
are  held  to  have  ratified  the  contract  and  waived  objections 
to  it.  Such  a  contract  is  not  void  but  is  simply  voidable 
at  the  option  of  a  party  defrauded  and  requires  affirmative 
action  on  his  part  to  relieve  himself  from  its  obligations.^ 
It  is  not  competent  for  a  public  corporation,  any  more 
than  for  a  private  individual,  to  relieve  itself  from  its 
contract  obligations  by  assailing  the  general  character  and 
reputation  of  its  lawful  agent,  or  to  repudiate  the  per- 
formance of  its  promises  on  the  ground  of  the  infidelity  of 
its  agent  in  other  transactions.^  While  fraud  may  be 
estabhshed  indirectly  from  circumstantial  evidence,  when 
such  is  relied  on,  it  must  be  by  the  proof  of  such  circum- 
stances as  are  irreconcilable  with  any  other  theory  than 
that  of  the  guilt  of  the  persons  accused.  When  the  facts 
are  as  consistent  with  innocence  as  with  guilt,  proof  of 
fraud  is  lacking.^ 

WTiile  it  is  true  that  one  who  is  led  into  a  contract  by 
fraud   is   privileged   to   repudiate  an   executory   contract, 

1  Baird  v.  Mayor,  96  N.  Y.  567. 
^  Idem. 
'  Idem. 
*  Idem. 

158 


€HAP.  XVI  ]        OTHER   ELEMENTS   OF    CONTRACT  [  §  98 

if,  and  only  if,  he  proceeds  to  do  so  promptly  upon  dis- 
covery of  the  fraud,  or  within  a  reasonable  time  there- 
after, he  may,  however,  pursue  another  course  where  the 
contract  is  partly  executed  at  the  time  of  the  discovery 
of  the  fraud,  that  is,  he  may  continue  in  the  execution  of 
the  contract,  and  seek  his  redress  for  the  fraud  in  an 
action  to  recover  damages.^  Fraud  may  consist  of  repre- 
sentations as  to  the  quantities  of  different  kinds  of  work 
and  material  needed  under  a  contract,  claimed  by  the 
public  body,  although  furnished  as  estimates  and  ap- 
proximations, to  be  approximately  accurate  and  the  re- 
sult of  expert  engineering  examination,  and  these  are  to 
be  regarded  not  as  representations  of  opinion  but  of  fact.^ 
Although  all  prior  agreements,  proposals,  negotiations  and 
bids  became  merged  in  the  contract,  such  merger  does  not 
prevent  these  or  any  other  matter  antecedent  to  the 
execution  of  the  contract  from  becoming  the  foundation  of 
a  claim  of  fraud. ^  The  engineer  of  such  a  public  body  is 
their  agent,  having  the  control  and  direction  of  the  con- 
struction of  a  public  work,  and  such  pubUc  body  is  Uable 
for  his  action  including  statements  and  representations,  in 
all  that  he  did  within  the  scope  of  his  agency.  Such 
public  body  may  not  claim  immunity  from  the  conse- 
quences of  what  he  did  within  the  line  of  his  duty.'* 
Merely  because  a  party  to  a  public  contract  sets  up  that 
the  instrument  signed  was  not  the  agreement  of  the 
parties  would  not  preclude  an  attempt  to  avoid  the 
contract  on  the  ground  that  he  was  induced  to  enter  into 
the  contract  and  execute  it  because  of  the  fraud  of  the 

1  New  London  v.  Robbins,  82  Conn.  623,  74  Atl.  938. 

2  New  London  v.  Robbins,  supra;  Wheaton  Bldg.  &  L.  Co.  v.  Boston,  204 
Mass.  218,  90  N.  E.  598. 

'  New  London  v.  Robbins,  supra. 
*  Idem. 

159 


§  98  ]  CREATION  OF  THE  CONTRACT       [  PART  H 

public   body.     The   contractor   will   not   be   estopped   to 
change  his  ground  of  avoidance.^ 

§  99.  Illegality. 

Illegal  agreements  are  void  and  will  not  be  enforced. 
A  contract  to  induce  public  officers  to  act  corruptly,  or  to 
bias  them  in  the  discharge  of  their  official  duties,  is  against 
pubhc  policy  and  void  and  one  who  induces  such  officers 
to  act  corruptly  may  not  when  the  vice  is  disclosed, 
retire  from  the  transaction,  with  his  consideration  returned 
to  him,  as  if  he  had  acted  with  honesty  and  in  good  faith.^ 
Nor  will  such  corruption  be  healed  and  a  contract  tainted 
wdth  bribery  made  whole  by  the  retirement  of  the  erring 
official  from  his  public  office.^  If  this  could  wipe  out  the 
guilt  a  new  method  of  successful  bribery  would  be  set  up. 
Anj^  effort  to  further  or  enforce  a  previous  illegal  and  cor- 
rupt agreement  is  in  like  degree  void.  The  only  way  the 
illegality  may  be  overcome  or  obviated  is  by  a  new  con- 
tract upon  a  new  and  lawful  consideration.''  And  even 
where  the  benefits  of  the  illegal  transaction  are  retained  no 
Uability  upon  an  implied  contract  to  pay  for  such  benefits 
will  arise.^  The  general  rule  is  that  a  contract  which  is 
illegal  because  expressly  prohibited,  is  void  and  no  one  can 
acquire  any  rights  under  it,  not  even  by  performance  in 
whole  or  in  part.    Parties  to  illegal  contracts  are  left  where 

1  New  London  v.  Robbins,  supra. 

2  State  V.  Cross,  38  Kan.  696,  17  Pac.  190;  Lindsey  v.  Philadelphia,  2  Phila. 
212. 

^McMUlan  v.  Barber  A.  P.  Co.,  151  Wis.  48,  138  N.  W.  94. 

*  McMillan  v.  Barber  A.  P.  Co.,  supra;  Chippewa  B.  Co.  v.  Durand,  122 
Wis.  85,  99  N.  W.  603. 

5  Metlina  v.  Dingledine,  211  N.  Y.  24,  104  N.  E.  1118;  Hart  v.  New  York, 
201  N.  Y.  45,  94  N.  E.  219;  Richardson  v.  Scotts  Bluff  County,  59  Neb.  400, 
81  N.  W.  309;  Norbeck  &  Co.  v.  State,  32  S.  D.  189,  142  N.  W.  847;  Pahner 
V.  State,  11  S.  D.  78,  75  N.  W.  818;  Smith  v.  Albany,  61  N.  Y.  444;  Berka  v. 
Woodward,  125  Cal.  119,  57  Pac.  777;  Northport  v.  Northport  T.  Co.,  27 
Wash.  543,  68  Pac.  204. 

160 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT        [  §  99 

the  law  finds  them.     It  will  not  aid  them  to  extricate  them- 
selves from  a  situation  of  their  own  creation.^ 

It  is  not  necessary  that  a  statute  shall  pronounce  an 
act  void  or  expressly  prohibit  it,  in  order  to  make  a  con- 
tract founded  on  such  statute  void  so  long  as  such  action 
is  made  penal.  A  contract  that  is  declared  null  and  void 
by  express  statute  is  in  hke  manner  just  as  null  and  void  as 
if  made  penal.  The  effect  upon  a  contract  is  the  same  in 
either  event.-  There  are  certain  exceptions  to  the  rule 
that  no  recovery  will  be  permitted.  Where  a  contract  is 
merely  unauthorized  or  is  merely  malum  prohibitum  not 
involving  moral  turpitude,  or  there  has  been  some  defect 
in  execution  not  substantial,  and  in  other  cases  where 
public  policy  is  promoted  or  where  the  parties  are  not  in 
pari  delicto  or  the  prohibition  of  the  statute  has  not  been 
levelled  against  them,  a  recovery  to  the  extent  of  com- 
pelling restoration  of  property  or  its  value  is  permitted.' 
The  provisions  of  a  statute  which  prohibit  certain  con- 
tracts are  not  the  subject  of  waiver  by  a  public  body  to  the 
extent  of  permitting  compensation  for  work  done  and 
materials  furnished  upon  the  basis  of  quantum  meruit.'' 
If  a  contract  contains  conditions  some  of  which  are  legal, 
and  others  of  which  are  not,  and  they  are  separable,  the 
legal  ones  will  be  enforced  and  the  illegal  ones  disregarded.^ 
And  where  an  agreement  has  two  or  more  distinct  stipula- 

iNorbeck  &  Co.  v.  State,  32  S.  D.  189,  142  N.  W.  847;  Harrison  Tp.  v. 
Addison,  176  Ind.  389,  96  N.  E.  146;  Worcester  v.  Eaton,  11  Mass.  378;  Hough 
V.  New  York,  145  N.  Y.  App.  Div.  718;  Carranza  v.  Hicks,  190  S.  W.  (Tex.) 
540. 

'  Norbeck  &  Co.  v.  State,  supra;  Berka  v.  Woodward,  supra. 

3  Berka  v.  Woodward,  supra;  Bay  v.  Davidson,  133  Iowa,  688,  111  N.  W.  25; 
Hill  County  v.  Shaw  &  B.  Co.,  225  Fed.  475;  Parkersburg  v.  Brown,  106  U.  S. 
487,  503,  27  L.  Ed.  238. 

4  Medina  v.  Dingledine,  211  N.  Y.  24,  104  N.  E.  1118. 

5  U  ^.v.  Hodson,  10  Wall.  77  U.  S.  395,  408,  19  L.  Ed.  937;  Ohio  v.  Findley, 
10  Ohio,  51;  U.  S.  v.  Bradley,  10  Pet.  (U.  S.)  343,  9  L.  Ed.  448. 

161 


§  99  ]  CREATION   OF   THE    CONTRACT  [  PART  U 

tions  or  promises,  one  of  which  is  against  pubUc  poUcy,  and 
the  others  are  not,  the  illegality  of  the  one  will  not  relieve 
from  liabihty  upon  the  promises  or  stipulations  which  are 
valid. ^  Where  one  of  two  considerations  or  a  distinct  part 
of  one  consideration,  is  unlawful  because  forbidden  by 
statute,  or  the  common  law,  the  illegality  taints  the  entire 
contract  and  makes  it  wholly  void.  This  is  so,  because, 
whether  the  promise  is  to  perform  one  lawful  act,  or  several 
acts,  some  of  which  are  illegal,  the  entire  contract  is 
vitiated,  since  the  consideration  permeates  the  whole 
and  is  the  basis  of  the  promises. ^  Where  property  real  or 
personal  has  been  acquired  by  means  of  a  contract  for- 
bidden by  some  constitutional  or  legislative  enactment,  or 
othenvise  unauthorized,  the  seller  while  denied  an  enforce- 
ment of  the  illegal  agreement  may  recover  the  specific  prop- 
erty in  all  cases  where  it  can  be  clearly  identified,  by  a 
return  of  all,  if  anything,  that  he  may  have  received  by 
virtue  of  the  contract  of  sale.^  When  a  contract  is  void 
for  want  of  power  to  make  it,  a  court  of  equity  has  no 
jurisdiction  to  enforce  such  a  contract.  Courts  of  equity 
cannot  disregard  statutory  and  constitutional  requirements 
any  more  than  courts  of  law,  and  may  not  interpose  their 
power  to  give  vaUdity  to  such  a  contract.^ 

1  McMuUen  v.  Hoffman,  174  U.  S.  639,  666,  43  L.  Ed.  1117,  aff'g  83  Fed. 
372,  45  L.  R.  A.  410;  U.  S.  v.  Mora,  97  U.  S.  413,  24  L.  Ed.  1013;  McCullough 
V.  Virginia,  172  U.  S.  102,  43  L.  Ed.  382;  Gelpcke  v.  Dubuque,  1  Wall.  (U.  S.) 
175,  17  L.  Ed.  520;  State  v.  Williams,  29  Ohio  St.  161;  State  v.  Perrysburg 
Bd.  of  Educ,  35  Ohio  St.  519;  U.  S.  T.  G.  Co.  v.  Brown,  166  N.  Y.  App.  Div. 
688,  217  X.  Y.  628;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Worcester 
V.  Eaton,  11  Mass.  368. 

estate  V.  Wilson,  73  Kan.  343,  84  Pac.  737.  See  Hart  v.  New  York, 
supra. 

'  Ft.  Worth  V.  Reynolds,  190  S.  W.  (Tex.)  501;  Parkersburg  v.  Brown,  106 
U.  S.  487,  27  L.  Ed.  238.  See  Bartlett  v.  Lowell,  201  Mass.  151,  87  N. 
E.  195. 

*  Hedges  v.  Dixon  County,  150  U.  S.  182,  192,  37  L.  Ed.  1044,  aff'g  37  Fed. 
304. 

162 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT       [  §  100 

§  100.  Public  Policy. 

It  is  against  the  general  policy  of  the  law  to  restrict 
the  power  of  citizens  to  make  any  kind  of  a  contract  which 
they  may  see  fit  to  enter  into  so  long  as  the  proposed  con- 
tract does  not  affect  the  morals  or  well-being  of  society  to 
such  a  degree  as  to  be  against  public  policy.^  Contracts 
opposed  to  the  public  policy  of  a  State  or  nation  are  void.^ 
All  agreements  for  pecuniary  considerations  to  control 
the  business  activities  of  government,  the  administration 
of  justice,  appointments  to  office,  the  course  of  legislation 
are  void,  and  where  such  contracts  are  in  controversy  it 
matters  not  that  a  particular  contract  is  free  from  any 
taint  of  actual  fraud,  oppression  or  corruption.  It  is  the 
general  tendency  of  such  contracts  which  condemns  them 
all  as  belonging  to  a  class  which  the  law  will  not  tolerate.^ 
Agreements  to  influence  official  action  or  secret  agreements 
whereby  officials  are  to  share  in  profits  of  contracts  which 
they  enter  into  are  void.  Public  poHcy  and  good  morals 
forbid  a  public  official  from  having  a  personal  interest  in 
bids  or  contracts,  lest  he  might  advance  his  own  interests 
at  the  expense  of  the  pubHc  body,  and  allow  the  hope  of 
personal  gain  to  prevent  a  faithful  discharge  of  his  pubHc 
duties."  Contracts  made  by  a  pubUc  body  with  its  own  agents 
and  officers  are  likewise  void  on  grounds  of  public  pohcy 
both    at    the    conamon    law   and    under    various    statutes 

1  Patterson  v.  Chambers  P.  Co.,  81  Oreg.  328,  159  Pac.  568;  Eugene  v. 
Chambers  P.  Co.,  81  Oreg.  352,  159  Pac.  576. 

estate  V.  Metcalfe,  75  Ala.  42;  Pickett  v.  Wiota  Sch.  Dist.,  25  Wis. 
551 

'McMuIlen  v.  Hoffman,  174  U.  S.  639,  43  L.  Ed.  1117,  aff'g  83  Fed.  372,  45 
L.  R.  A.  410;  Atcheson  v.  Mallon,  43  N.  Y.  147;  Colusa  County  v.  Welch,  122 
Cal  428  55  Pac.  243. 

^  Crocker  v.  U.  S.,  240  U.  S.  74,  60  L.  Ed.  533,  aff'g  49  Ct.  CI.  85;  Critchfield 
V.  Bermudez  A.  P.  Co.,  174  111.  466,  51  N.  E.  552;  Denison  v.  Crawford  County, 
48  Iowa,  211;  State  v.  Cross,  38  Kan.  696,  17  Pac.  190. 

163 


§  100  ]  CREATION   OF   THE   CONTRACT  [  PART  II 

declaratory  thereof.^  Contracts  tending  to  stifle  and  lessen 
competition  in  bidding  for  public  work,  secret  agreements 
to  combine  interests  and  conceal  it  from  the  public,  and  to 
submit  simulated  bids  are  illegal,  against  public  policy  and 
will  not  be  enforced  to  aid  any  party  to  such  a  contract.^ 
Contracts  to  influence  public  officials  by  donation  of  a  site 
for  public  buildings  are  against  public  policy  and  cannot 
be  enforced.^  But  where  a  public  institution  must  be 
located  or  a  structure  built,  private  contributions  on  condi- 
tion that  a  particular  location  is  selected  are  not  against 
public  policy.^  If  a  contract  offends  against  public  morals, 
the  courts  will  not  enforce  it  wherever  made  for  a  contract 
which  is  illegal  is  illegal  and  void  everywhere.  Again, 
courts  will  refuse  to  regard  the  law  of  the  place  of  contract, 
if  it  be  immoral  or  unjust,  or  if  it  harms  the  citizens  of  the 
State  where  enforcement  is  sought,  or  impairs  its  own 
authority  or  the  rights  of  its  citizens.^ 

§  101.  Contracts   against  Public  Policy — Fees  of  Public 
Oflacers. 

WTiere  a  statute  forbids  a  person  to  ask  or  receive  com- 
pensation for  services  in  an  official  capacity  greater  than 
prescribed  by  law,  an  agreement  to  pay  such  extra  com- 
pensation creates  no  binding  obligation.^     An  agreement 

iSmith  V.  Albany,  61  N.  Y.  444;  Seaman  v.  New  York,  172  App.  Div.  740, 
225  N.  Y.  648;  Klemm  v.  Newark,  61  N.  J.  L.  112,  38  Atl.  692. 

"  McMullen  v.  Hoffman,  supra;  Richardson  v.  Crandall,  48  N.  Y.  348; 
Atcheson  v.  Mallon,  43  N.  Y.  147. 

3  Edwards  v.  Goldsboro,  141  N.  C.  60  53  S.  E.  652.    See  §§  20-21,  ante. 

*  Currier  v.  U.  S.,  184  Fed.  700;  Island  County  v.  Babcock,  17  Wash.  438, 
50  Pac.  54;  State  v.  Siting,  29  Kan.  397;  Pepin  County  v.  Prindle,  61  Wis. 
301,  21  N.  W.  254;  Wisner  v.  McBride,  49  Iowa,  220;  State  v.  Johnson,  52  Ind. 
197;  George  v.  Harris,  4  N.  H.  533,  17  Am.  Dec.  446;  Davis  v.  Choctaw  County, 
58  Okla.  77,  158  Pac.  294. 

^  West  Cambridge  v.  Lexington,  18  Mass.  506;  Oscanyan  v.  Winchester 
Arms  Co.,  103  U.  S.  201,  26  L.  Ed.  539,  aff'g  15  Blatch.  79. 

«Wadsworth  v.  Bd.  of  Supervisors,  217  N.  Y.  484,  499,  112  N.  E.  161; 

164 


CHAP.  XVI  ]    OTHER  ELEMENTS  OF  CONTRACT       [  §  101 

for  the  payment  of  a  less  sum  for  any  public  service  by  an 
official  than  the  fee  fixed  by  statute  is  void  for  the  same 
reason  that  it  is  against  public  policy.^ 

In  like  manner  the  promise  of  a  candidate  for  public 
office  that  if  elected  he  would  pay  all  fees  into  the  treasury 
of  the  public  body  and  accept  a  salary  is  illegal  and  can- 
not be  enforced.  The  fees  or  salary  of  a  public  oflScer  as 
fixed  by  law  are  an  incident  of  the  office  and  it  is  contrary 
to  public  poUcy  for  candidates  to  attempt  to  attain  office 
by  promises  to  perform  the  duties  for  any  other  compensa- 
tion except  that  fixed  by  law,  and  such  promise  cannot 
be  enforced ;  ^  nor  can  estoppel  be  urged  against  his  claim 
for  the  compensation  fixed  by  statute  because  of  his  pubhc 
promises  to  take  less.^  Nor  will  acceptance  of  a  less 
amount  prevent  recovery  of  unpaid  arrears.^  The  giving 
of  contingent  fees  or  compensation  for  services  rendered  to 
the  public  is  contrary  to  public  policy.  A  contract  by  tax 
commissioners  whose  duties  and  salary  are  fixed  by  statute 
to  pay  a  firm  of  attorneys  for  advice  and  counsel  rendered 
to  them  to  enable  them  to  learn  of  and  place  upon  the 
tax  list  certain  lands  omitted  is  against  the  public  policy 
of  this  country  which  does  not  permit  any  system  of  farm- 
ing out  the  collection  of  public  revenues.^ 

McCook  County  v.  Burstad,  30  S.  D.  266,  138  N.  W.  303;  Rochester  v.  Camp- 
bell, 184  Ind.  421,  111  N.  E.  420. 

1  Wolf  V.  Humboldt  County,  36  Nev.  26,  131  Pac.  964;  Russell  v.  Cordwent, 
152  S.  W.  (Tex.)  239. 

2  Galpin  v.  Chicago,  269  111.  27,  109  N.  E.  713;  Abbott  v.  Hayes  County,  78 
Neb.  729,  111  N.  W.  780;  People  ex  rel.  Satterlee  v.  Bd.  of  Police,  75  N.  Y.  38. 

3  Galpin  v.  Chicago,  supra;  Grant  v.  Rochester,  79  N.  Y.  App.  Div.  460, 
175  N.  Y.  473;  Moore  v.  Bd.  of  Education,  121  N.  Y.  App.  Div.  862,  195  N.  Y. 
601,  614,  88  N.  E.  645,  89  N.  E.  1105. 

*  Pitt  V.  Bd.  of  Education,  216  N.  Y.  304,  110  N.  E.  612. 
6  Platte  County  v.  Gerrard,  12  Neb.  244,  11  N.  W.  298. 


165 


CHAPTER  XVII 

WHEN   PUBLIC    CONTRACT   IMPLIED 

§  102.  Implied   Contracts — When  Liability  upon  Implied 
Obligation  Will  Arise. 

A  public  corporation  having  the  legal  power  to  contract 
may  be  bound  by  an  implied  contract  in  the  same  manner 
as  a  natural  person.^  Pubhc  bodies  are  hable  upon  un- 
authorized contracts  which  are  not  illegal  where  there  has 
been  performance  and  the  benefits  of  such  are  retained  by 
the  pubhc  body.  But  the  suit  in  such  cases  is  not  upon 
the  contract  but  upon  quantima  valebat.^  An  implied 
contract  may  be  proved  by  circumstances,  acts  and 
conduct  and  sayings  of  pubhc  officers  having  authority  to 
bind  the  corporation.^ 

Public  bodies  may  be  bound  the  same  as  individuals 
upon  impUed  contracts  made  by  its  agents  and  to  be 
deduced  from  corporate  acts  even  without  a  vote  of  the 
governing  body,  provided  the  contract  is  one  which  is 
within  the  scope  of  its  corporate  powers  and  is  not  one 
which  by  charter  or  statute  must  be  made  in  a  particular 

1  Harlem  G.  L.  Co.  v.  Mayor,  33  N.  Y.  309;  Re  Dugro,  50  N.  Y.  513;  Nelson 
V.  Mayor,  63  N.  Y.  535;  Baird  v.  Mayor,  96  N.  Y.  567;  Moore  v.  Mayor,  73 
N.  Y.  238,  29  Am.  R.  134;  Pt.  Jervis  W.  Co.  v.  Pt.  Jervis,  151  N.  Y.  Ill,  45 
N.  E.  388;  Kramrath  v.  Albany,  127  N.  Y.  575,  28  X.  E.  400;  Marsh  v.  Fulton 
County,  10  Wall.  (U.  S.)  676,  19  L.  Ed.  1040;  Argenti  v.  San  Francisco,  16 
Cal.  2.5G;  Brash-Elec.  L.  Co.  v.  Montgomery,  114  Ala.  433,  21  So.  960;  Taylor 
V.  Lanbertville,  43  N.  J.  Eq.  107. 

2  St.  Louis  Hay  Co.  v.  U.  S.,  191  U.  S.  159,  48  L.  Ed.  130,  aff'g  37  Ct.  CI. 
281;  Clark  v.  U.  S.,  95  U.  S.  539,  24  L.  Ed.  518. 

'  Hardwick  Town  Dist.  v.  Wolcott,  78  Vt.  23,  61  Atl.  471;  Maher  v.  Chicago, 
38  III.  266. 

166 


CHAP.  XVIT  ]       WHEN    PUBLIC    CONTRACT   IMPLIED  [  §  103 

way  or  manner.^  As  pointed  out  if  the  act  is  ultra  vires 
because  illegal,  it  is  void  and  there  can  be  no  ratification, 
as,  for  instance,  where  the  manner  of  contracting  is  limited 
by  statute.  In  these  cases  no  implied  contract  can  arise. 
But  this  does  not  prevent  public  bodies  from  being  liable 
upon  quantum  meruit,  when  they  have  enjoyed  the 
benefit  of  work  performed  or  goods  purchased,  when  no 
statute  forbids  or  limits  the  power  to  contract  therefor. ^ 

§  103.  Taking  or  Using  Property  in  Performance  of  Duty 
but  Against  Will  of  Owner. 
Often  a  public  body  is  authorized  by  express  statute 
to  carry  out  some  public  enterprise,  in  the  maintenance 
and  establishment  of  which,  and  as  a  necessary  incident  to 
v/hich  it  has  the  power  to  designate  and  procure  a  loca- 
tion. If  in  the  exercise  of  that  imphed  power  it  takes  the 
property  of  an  individual,  not  by  agreement,  but  against 
his  will,  the  public  body  is  bound  to  pay  for  the  use  of 
property  which  it  is  thus  authorized  to  take  upon  an 
implied  contract  to  pay  what  it  is  reasonably  worth,  or  an 
action  may  be  maintained  upon  the  duty  of  the  public 
body  to  make  compensation  for  property  taken  by  its 
officers  against  the  will  of  its  owners.  Both  actions  have 
their  foundation  in  the  obligation  to  do  justice,  which 
rests  upon  public  bodies  in  like  degree  as  upon  other 
persons.^  The  statutes  relating  to  awards  of  contracts  to 
the  lowest  bidder  upon  competitive  bidding  or  requiring  a 
prior  appropriation  can  have  no  application  to  a  situation 
of  this  character."* 

1  Kratorath  v.  Albany,  127  N.  Y.  575,  28  N.  E.  400;  Peterson  v.  Mayor,  17 
N.  Y.  449;  Nelson  v.  Mayor,  63  N.  Y.  535. 
^  Kramrath  v.  Albany,  supra. 
'  Poillon  V.  Brooklyn,  101  N.  Y.  132,  4  N.  E.  191. 
^  Poillon  V.  Brooklyn,  supra. 

167 


§  104  ]  CREATION   OF   THE    CONTRACT  [  PART  II 

§  104.  Where  Money  is  Received  or  Property  Appro- 
priated. 
Implied  contracts  arise  in  those  cases  where  money  or 
other  property  of  a  party  is  received  by  a  pubUc  body 
under  such  circumstances  that  the  general  law  independent 
of  the  express  contract,  imposes  the  obligation  upon  the 
public  body  to  do  justice  with  respect  to  the  same.^  It 
is  a  rule  of  the  common  law  that  an  action  hes  for  money 
paid  by  mistake,  or  upon  a  consideration  which  happens 
to  fail,  or  for  money  obtained  through  imposition.  This 
arises  as  above  stated  from  the  obligation  to  do  justice 
which  rests  upon  all  persons,  natural  or  artificial.  So 
where  a  public  body  obtains  the  money  or  property  of 
others  without  authority,  the  law,  independent  of  any 
statute,  will  compel  restitution  or  compensation.^  Ac- 
cordingly where  a  public  body  obtains  money  by  the  sale 
of  bonds  which  are  invalid  and  deceived  the  purchaser,  by 
pretending  false  dates  upon  the  bonds  were  in  fact  true,  an 
impUed  contract  to  repay  the  money  arises.^  It  requires 
neither  argument  nor  authority  to  support  this  proposition 
that  where  the  money  or  property  of  an  innocent  person 
has  gone  into  the  treasury  of  any  public  body  whether 
it  be  the  nation,  the  State  or  their  subdivisions  or  terri- 
tories, by  means  of  a  fraud  to  which  its  agent  is  a  party, 
such  money  or  property  cannot  be  held  by  such  public 
body  against  the  claim  of  the  wronged  and  injured  party. ^ 
An  agent  is  not  an  agent  for  such  a  purpose,  his  doings 
are  vitiated  by  dishonesty  and   confer  no  rights  on  his 

1  Ward  V.  Kropf,  207  N.  Y.  467,  101  N,  E.  469;  Argenti  v.  San  Francisco, 
16  Cal.  256. 

2  Louisiana  v.  Wood,  102  U.  S.  294,  26  L.  Ed.  153;  Marsh  v.  Fulton  County, 
10  Wall.  (U.  S.)  676,  19  L.  Ed.  1040. 

'  Louisiana  v.  Wood,  supra. 

*  U.  S.  V.  State  Nat.  Bank,  96  U.  S.  30,  24  L.  Ed.  647,  aff'g  10  Ct.  CI.  519. 

168 


CHAP.  XVII  ]     WHEN   PUBLIC    CONTRACT   IMPLIED  [  §  105 

principal.^  The  law  creates  an  exception  to  the  general 
rule  stated,  where  the  promise  is  for  money  received  or 
property  appropriated,  and  if  the  express  promise  is  not 
enforceable  an  impHed  obligation  for  the  money  or  the 
value  of  the  property  springs  into  existence.^ 

§  105.  When  Obligation  Arises  for  Money  Had  and  Re- 
ceived— Trust  Liability. 

Where  a  public  body  receives  materials  without  author- 
ity under  a  void  contract  and  uses  them,  and  obtains 
their  value  from  property  owners  by  means  of  assessments, 
it  becomes  liable  for  the  actual  value  of  the  property  or 
what  it  obtained  therefor,  but  it  will  not  be  concluded, 
however,  by  the  contract  price  as  the  liability  arises  not 
upon  the  contract.'^  And  a  public  body  will  be  held 
liable  as  trustee  where  a  contractor  made  a  contract  with 
it  to  remove  garbage  at  a  monthly  rate  and  when  his 
work  was  finished  there  was  paid  into  the  treasury  of  the 
public  body  an  unexpended  balance  more  than  sufficient 
to  pay  his  claim,  for  the  reason  that  in  such  a  situation 
the  fund  becomes  impressed  with  a  trust  which  will 
sustain  an  action  for  money  had  and  received  to  his  use.'* 
In  similar  manner  where  a  health  board  undertakes  without 
authority  to  remove  certain  nuisances  and  makes  a  contract 
therefor  without  a  sufficient  appropriation  and  thereafter  the 
public  body  levies  assessments  part  of  which  were  paid  into 
its  treasury  it  will  be  liable  in  equity  to  pay  this  amount  to 
the  contractor  in  an  action  for  money  had  and  received.^ 

1  U.  S.  V.  State  Nat.  Bank,  supra;  Long  v.  Lemoyne  Boro.,  222  Pa.  St.  311, 
71  Atl.  211. 

"^  Argenti  v.  San  Francisco,  supra;  Ward  v.  Kropf ,  supra;  see  Agawam  Nat'l 
Bank  v.  South  Hadley,  128  Mass.  503. 

3  Nelson  v.  Mayor,  63  N.  Y.  535,  544;  Argenti  v.  San  Francisco,  16  Cal.  256. 

*  Swift  V.  New  York,  83  N.  Y.  528. 

»  Parker  v.  PhUadelphia,  92  Pa.  St.  401. 

169 


§  106  ]         CREATION  OF  THE  CONTRACT       [  PART  II 

§  106.  When  Liability  Arises — Failure  to  Comply  with 
Statute. 
Where  a  public  body  occupies  certain  property  and  con- 
tinues beyond  the  term,  even  if  the  holding  over  fails 
to  comply  with  the  statutory  manner  of  entering  into 
the  contractual  relations,  if  its  occupation  confers  some 
pecuniary  gain,  benefit  or  advantage  upon  the  public  body, 
or  is  a  performance  of  some  pubHc  duty  enjoined  by 
statute,  it  is  liable  upon  an  implied  contract.^ 

§  107.  Emergency  Contracts. 

Contingencies  may  arise  in  the  administration  of  city 
affairs  where  a  thing  of  absolute  necessity  is  required  to 
be  furnished  and  is  furnished  at  a  reasonable  price,  or 
where  services,  materials  and  property  may  be  immediately 
needed  and  where  competitive  offers  and  written  contracts 
would  be  of  no  service  or  impossible  of  obtainment.  In 
these  cases  it  was  never  intended  that  the  statutes  requir- 
ing competition,  or  writing,  would  have  appHcation.  Where 
officers  acting  in  entire  good  faith  to  meet  the  public 
needs,  deem  themselves  wanting  in  power,  under  a  mis- 
take of  law,  or  in  opportunity  because  of  the  emergency, 
they  may  incur  binding  obligations  within  the  corporate 
purposes  of  the  public  body.  Where  a  public  body  has  the 
legal  power  to  contract  for  a  thing  under  such  circum- 
stances, it  may  become  liable  upon  an  implied  obligation 
for  the  services,  materials  or  property  thus  obtained.^ 
But  the  emergency  must  be  a  real  emergency  which  is  a 
sudden  and  unexpected  occurrence  or  condition  calling  for 

1  Commercial  Wharf  Corp.  v.  Boston,  208  Mas3.  482,  94  N.  E.  805;  Dickin- 
son V.  Boston,  188  Mass.  595,  75  N.  E.  68;  Douglas  v.  Lowell,  194  Mass.  268, 
80  N.  E.  510;  Witt  v.  Mayor,  6  Robt.  441. 

2  Plarlem  G.  L.  Co.  v.  Mayor  of  New  York,  33  N.  Y.  309;  North  River  Elec. 
L.  Co.  V.  New  York,  48  N.  Y.  App.  Div.  14.  See  Brooklyn  City  R.  Co.  v. 
Whalen,  191  N.  Y.  App.  Div.  737,  229  N.  Y.  570,  128  N.  E.  215. 

170 


CHAP.  XVII  ]       WHEN    PUBLIC    CONTEACT   IMPLIED  [  §  107 

immediate  action.^  The  furnishing  of  light  for  city  streets 
to  prevent  a  city  from  being  plunged  in  darkness  is  such 
an  emergency.^  But  permanent  inadequacy  of  street 
railroad  service  is  not  such  an  emergency,  and  will  not 
justify  a  city  in  embarking  in  the  business  of  operating 
stage  lines.  ^ 

AVhere  a  city  fails  to  insert  the  amount  of  a  contract  in 
the  tax  levy  for  a  current  year  but  water  has  been  fur- 
nished under  circumstances  which  imply  a  contract,  and 
under  a  statute  authorizing  the  authorities  to  obtain  a 
water  supply  it  has  been  declared  that  such  contract  was 
an  exception  to  the  rule  requiring  its  amount  to  be  inserted 
in  the  tax  levy  and  that  the  city  would  be  liable  to  pay 
what  the  commodity  was  fairly  and  reasonably  worth 
during  the  period.^ 

When,  however,  these  various  statutes  which  require  a 
prior  appropriation,  provision  for  the  contract  compensa- 
tion in  a  tax  levy,  an  award  to  the  lowest  bidder  upon 
competition,  approval  by  the  voters  or  by  a  certain 
number  of  taxpayers  in  a  locality  or  that  the  contract  to 
be  enforceable  shall  be  in  writing,  have  appHcation,  they 
must  be  fully  complied  with  and  pubhc  bodies  are  not 
liable  upon  an  implied  contract  made  in  violation  of  such 
charter  or  statutory  requirements.^  An  exception  to  the 
rule  exists  in  the  cases  of  money  received  or  property 
appropriated.^     Where   a    public    body   obtains    property 

1  Brooklyn  City  R.  Co.  v.  Whalen,  supra. 

2  North  River  Elec.  Co.  v.  New  York,  supra. 
5  Brooklyn  City  R.  Co.  v.  Whalen,  supra. 

^  Pt.  Jervis  Water  Co.  v.  Pt.  Jervis,  151  N.  Y.  Ill,  45  N.  E.  388. 

5  McDonald  v.  Mayor,  68  N.  Y.  23;  Hart  v.  New  York,  201  N.  Y.  45,  94 
N.  E.  219;  Wadsworth  v.  Bd.  of  Super's  Livingston  County,  217  N.  Y.  484, 
112  N.  E.  161;  Ft.  Edward  v.  Fish,  156  N.  Y.  363,  50  N.  E.  973. 

6  Louisiana  v.  Wood,  102  U.  S.  294,  26  L.  Ed.  153;  Lincoln  Land  Co.  v.  Vil. 
of  Grant,  57  Neb.  70,  77  N.  W.  349;  Higgins  v.  San  Diego,  118  Cal.  524,  45 
Pac.  824. 

171 


§  107  ]  CREATION   OF  THE   CONTRACT  [  PART  H 

under  a  void  contract  and  actually  uses  it  and  collects 
from  property  owners  its  value  through  assessments,  the 
obligation  to  do  justice  which  rests  alike  on  public  bodies 
as  on  natural  persons  imposes  the  duty  to  make  compensa- 
tion for  the  value  of  such  property  to  the  person  from 
whom  it  was  obtained.  The  public  body  in  such  cases  is 
liable  only  for  the  actual  value  of  the  property  or  what  it 
obtained  for  it  and  is  not  concluded  by  the  contract 
price.  ^ 

§  108.  When  Liability  upon  Implied  Obligation  will  not 
Arise. 

An  implied  contract  will  not  arise  where  an  express 
contract  is  forbidden  by  law.  It  stands  to  reason  that  if 
there  is  no  power  to  make  an  express  contract,  an  implied 
contract  cannot  arise  against  the  express  prohibition  of 
the  law.^  Where  a  particular  manner  is  prescribed  to  make 
a  contract,  a  contract  which  does  not  follow  that  manner 
cannot  be  enforced  upon  the  basis  of  an  implied  liability.^ 
In  similar  manner  if  work  or  services  or  supplies  are 
ordered  by  an  officer  or  agent  of  a  municipality  or  the  head 
of  a  department  or  board  or  committee  of  the  State  or 
nation  who  is  unauthorized  to  make  a  contract,  no  implied 
obligation  arises.'^     Where  a  statute  exists  to  prevent  the 

1  Nelson  v.  New  York,  63  N.  Y.  535,  544;  Argent i  v.  San  Francisco,  16  Cal. 
256;  Bluthenthal  v.  Town  of  Headland,  132  Ala.  249,  31  So.  87. 

2  McDonald  v.  Mayor,  68  N.  Y.  23;  Parr  v.  Greenbush,  72  N.  Y.  463;  Dickin- 
son V.  Poughkeepsie,  75  N.  Y.  65;  Berka  v.  Woodward,  125  Cal.  119,  57  Pac. 
777;  Niles  Water  Wks.  Co.  v.  Niles,  59  Mich.  311,  26  N.  W.  525;  Citizens' 
Bk.  V.  City  of  Spencer,  126  Iowa,  101,  101  N.  W.  643;  Schumm  v.  SejTOour, 
24  N.  J.  Eq.  143;  Boston  Co.  v.  Cambridge,  163  Mass.  64,  39  N.  E.  787. 

'  In  re  Niland,  193  N.  Y.  180,  85  N.  E.  1012;  Medina  v.  Dingledine,  211  N.  Y. 
24,  104  N.  E.  1118;  Vito  v.  Simsbury,  87  Conn.  261,  87  Atl.  722;  City  of  WeUs- 
ton  V.  Morgan,  65  Ohio  St.  219;  Newbery  v.  Fox,  37  Minn.  141,  33  N.  W.  333; 
Fiske  V.  Worcester,  219  Mass.  428,  106  N.  E.  1025. 

^Bartlett  v.  Lowell,  201  Mass.,  151,  87  N.  E.  195;  Floyd  County  v.  Owego 
Bridge  Co.,  143  Ky.  693,  137  S.  W.  237;  New  Jersey  Car.  Spring  Co.  v.  Jer- 
sey City,  64  N.  J.  L.  514,  46  Atl.  649. 

172 


CHAP.  XVII  ]      WHEN    PUBLIC   CONTRACT   IMPLIED  [  §  108 

making  of  certain  contracts  and  its  terms  are  disregarded 
in  the  making  of  the  contract,  the  contractor  cannot 
recover  for  suppUes  fm-nished  under  such  contract  upon  an 
imphed  promise.^  The  reason  for  these  rules  is  stated  thus: 
the  law  never  implies  a  promise  to  pay  unless  some  duty 
creates  such  an  obhgation  and  it  never  impHes  a  promise 
to  do  an  act  contrary  to  duty  or  contrary  to  law.  Assump- 
sit may  properly  be  maintained  against  public  bodies  in 
certain  circumstances  upon  an  implied  promise,  but  a 
promise  to  pay  can  never  be  imphed  in  circumstances 
where  the  pubhc  body  possesses  no  power  to  contract.^ 

Where  charter  or  statute  prohibits  contracts  except  in 
the  manner  there  prescribed,  or  under  defined  conditions 
and  circumstances,  no  imphed  contract  can  arise  for  work 
done  or  materials  furnished  in  violation  of  or  without  com- 
plying with  such  requirements.^  This  is  true  even  though 
the  work  has  been  done  and  the  pubhc  body  has  received 
the  benefits.'*  In  some  jurisdictions,  however,  it  has  been 
announced  that  where  the  public  body  has  received  the 
benefits  of  an  executed  contract,  the  law  implies  a  promise  to 
pay  for  what  it  enjoys  provided  it  had  the  power  to  contract 
therefor,  although  the  manner  prescribed  or  the  exact  powers 
were  not  followed.^  When  statutes  forbid  the  making  of  con- 
tracts between  public  bodies  and  officials  of  that  body,  and 
whether  a  statute  exists  or  not,  for  the  rule  is  a  rule  of  the 

1  Edison  Elec.  Co,  v.  Pasadena,  178  Fed.  425;  Salt  Creek  Tp.  v.  King  Iron 
B.  &  M.  Co.,  51  Kan.  520,  33  Pac.  303;  Perry  Water  Co.  v.  Perry,  29  Okla. 
593,  120  Pac.  582. 

2  Burrill  i'.  Boston,  2  Clifford  C.  C.  590,  596,  4  Fed.  Cas.  826;  Bryan  v. 
Page,  51  Tex.  532,  32  Am.  Rep.  637;  Buchanan  v.  Litchfield,  102  U.  S.  278; 
Berhn  Iron  B.  Co.  v.  San  Antonio,  62  Fed.  882. 

3  Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Donovan  v.  Mayor,  33  N.  Y. 
291. 

^  Buchanan  v.  Litchfield,  102  U.  S.  293,  and  cases  cited,  ante. 
5  Maher  v.  Chicago,  38  111.  266;  East  St.  Louis  v.  East  St.  Louis  G.  L.  &  C. 
Co.,  98  lU.  415. 

173 


§  108  ]         CREATION  OF  THE  CONTRACT       [  PART  II 

common  law,  of  which  these  statutes  are  in  most  instances 
merely  declaratory,  no  contract  can  be  implied  contrary  to 
the  statute  or  to  the  common-law  rule.  Accordingly  no  con- 
tract will  be  implied  to  pay  a  pound  master  who  furnishes 
his  own  premises  to  be  used  as  a  pound.  ^  It  has  been  de- 
clared, however,  that  an  implied  contract  will  arise  unless 
it  would  be  against  public  policy. ^  But  a  mere  irregularity 
in  the  exercise  of  the  general  powers  of  the  governing  body 
of  a  municipal  corporation  will  not  operate  to  defeat  an 
implied  contract  where  the  municipaUty  receives  the  fruits 
of  the  contract.  This  is  for  the  reason  that  acts  of  the 
general  governing  body  of  a  municipahty  within  its  general 
powers  which  are  published  and  represented  as  valid,  with 
invitations  to  individuals  to  enter  into  engagements  and 
expend  money  and  labor  on  the  faith  of  them,  may  be 
assumed  by  those  dealing  with  the  municipal  authorities 
to  be  as  represented,  and  where  the  public  body  receives  the 
benefits  of  the  contract  entered  into  on  the  faith  of  such  rep- 
resentations it  is  estopped  from  setting  up  any  irregularity 
not  of  substance  of  power  or  jurisdictional  in  character. ^ 

But  pubhc  bodies  are  not  liable  under  a  void  contract  to 
pay  even  quantum  meruit  for  the  materials  used.^  While 
the  principles  of  estoppel  underlie  many  of  the  decisions 
affecting  situations  above  referred  to  where  an  implied 
obUgation  has  been   raised,^  public    bodies    are  not  pre- 

1  Macy  V.  Duluth,  68  Minn.  452,  71  N.  W.  687.  See  Seaman  v.  New  York, 
172  N.  Y.  App.  Div.  740,  225  N.  Y.  648. 

2  Call  Pub.  Co.  V.  Lincoln,  29  Neb.  149,  45  N.  W.  245. 

3  Moore  v.  New  York,  73  N.  Y.  238,  29  Am.  R.  134;  Brady  v.  New  York, 
20  N.  Y.  312;  Marion  W.  Co.  v.  Marion,  121  Iowa,  306,  96  N.  W.  883;  State 
Board  v.  Cits.  St.  R.  Co.,  47  Ind.  407;  Laird  Norton  Yards  v.  Rochester,  117 
Minn.  114,  134  N.  W.  644. 

*  Bartlett  v.  Lowell,  201  Mass.  151,  87  N.  E.  195;  Bigler  v.  New  York,  5 
Abb.  N.  C.  51;  Donovan  v.  New  York,  33  N.  Y.  291;  Keane  v.  New  York,  88 
N.  Y.  App.  Div.  542;  Worell  Mfg.  Co.  v.  Ashland,  159  Ky.  656,  167  S  W.  922. 

5  Chicago  V.  Sexton,  115  111.  230,  2  N.  E.  263;  London  &  N.  Y.  Land  Co.  v. 
Jellicoe,  52  S.  W.  (Tenn.)  995. 

174 


CHAP.  XVII  ]       WHEN    PUBLIC    CONTRACT   IMPLIED  [  §  109 

eluded  from  setting  up  the  defense  of  ultra  vires  in  these 
cases  where,  as  shown,  an  implied  contract  is  not  per- 
mitted.^ Other  cases  admit  of  recovery  on  the  theory  of 
unjust  enrichment.  If  complete  performance  is  prevented 
by  law,  a  recovery  is  allowed  for  benefits  conferred  by  part 
performance  upon  the  principle  of  the  maxim  that  no  one 
shall  be  made  rich  by  making  another  poor.  The  recovery 
in  such  cases  is  not  upon  a  contract  which  is  invalidated 
but  upon  an  implied  agreement,  founded  upon  a  moral 
obhgation  to  account  for  moneys  or  property  received, 
which  arises  by  virtue  of  a  new  and  quasi  contractual  rela- 
tion.- If  in  making  a  contract  the  provisions  of  the  char- 
ter are  not  comphed  with,  and  the  contract  thereby 
proved  void,  yet  where  the  pubhc  body  obtained  the  use 
of  an  asphalt  plant  under  the  contract  to  repair  its  streets, 
it  will  be  hable  for  the  reasonable  value  of  the  use  of  the 
plant  for  the  period  of  such  repairs.^ 

§  109.  When  Contract  not  Implied — Taking  Property  under 
Claim  of  Right. 

Where  the  public  body  takes  property  not  in  the  exer- 
cise of  the  power  of  eminent  domain  and  not  under  a  con- 
cession of  ownership  in  an  individual,  it  is  not  liable  to 
pay  therefor  upon  an  implied  contract,  as  its  action  pre- 
cludes the  implication  of  a  promise  to  pay.  It  is  hable  if 
at  all  in  tort. 

It  is  only  where  in  the  exercise  of  its  governmental 
power  it  takes  property,  the  ownership  of  which  it  concedes 
to  be  in  an  individual  that  it  is  hable  upon  an  imphed 

1  Wheeler  v.  Poplar  Bluff,  149  Mo.  36,  49  S.  W.  1088;  Ft.  Scott  v.  Eads 
Brokerage  Co.,  117  Fed.  51. 

2  Ward  V.  Kropf,  207  N.  Y.  467,  101  N.  E.  469;  First  Nat.  Bk.  v.  Goodhue, 
120  Minn.  362,  139  N.  W.  599. 

3  Nebraska  Bitulithic  Co.  v.  Omaha,  84  Neb.  375,  121  N.  W.  443. 

175 


§  109  ]         CREATION  OF  THE  CONTRACT       [  PART  11 

promise  to  pay.^  The  public  body,  where  it  is  the  national 
government,  may  not  be  sued  without  its  consent  for 
torts.  It  is  liable,  however,  for  the  use  of  patented  articles 
with  the  consent  of  the  owner  of  the  patent,  upon  an 
implied  obhgation.- 

§  110.  Use  and  Occupation  of  Private  Property — Adoption 
of  Tortious  Acts  of  Agents. 
If  a  municipality  undertakes  to  use  property  of  an 
individual  which  it  has  no  power  or  authority  to  use,  it 
cannot  be  held  liable  upon  an  implied  contract  for  use  and 
occupation.  And  even  if  the  acts  constitute  a  trespass  the 
ordinary  right  to  waive  the  tort  and  sue  upon  an  implied 
contract  will  not  arise  against  a  municipality  or  other 
public  body,  as  such  rule  has  no  application  in  the  case  of 
such  public  bodies  since  their  powers  are  limited  and  they 
cannot  exercise  powers  which  have  not  been  expressly 
granted  or  those  which  are  necessary  incidents  to  the 
powers  granted.^  If  a  public  body,  without  knowledge 
through  its  public  officers  that  a  well  was  located  upon 
private  property,  paid  a  plumber  for  connecting  its  water 
mains  with  such  well,  this  is  not  a  ratification  sufficient  to 

1  Tempel  v.  U.  S.,  248  U.  S.  121,  63  L.  Ed.  162;  U.  S.  v.  Great  Falls  Mfg.  Co., 
112  U.  S.  645,  28  L.  Ed.  846,  aff'g  16  Ct.  CI.  160;  U.  S.  v.  Cress,  243  U.  S.  316, 
61  L.  Ed.  746;  U.  S.  v.  Lynah,  188  U.  S.  445,  47  L.  Ed.  539;  U.  S.  v.  Buffalo 
Pitts.  Co.,  234  U.  S.  228,  58  L.  Ed.  1290,  aff'g  193  Fed.  905;  Peabody  v.  U.  S., 
231  U.  S.  530,  58  L.  Ed.  351,  aff'g  46  Ct.  CI.  39;  U.  S.  v.  Palmer,  128  U.  S. 
262,  32  L.  Ed.  442,  aff'g  20  Ct.  CI.  432. 

2  See  Farnham  v.  U.  S.,  240  U.  S.  537,  60  L.  Ed.  786;  Cramp  &  Sons  Ship 
Co.  V.  Curtis  Turbine  Co.,  246  U.  S.  28,  62  L.  Ed.  560;  Marconi  Wireless  Co.  v. 
Simon,  246  U.  S.  46,  62  L.  Ed.  .568. 

» Wilson  V.  Mitchell,  17  S.  D.  515,  97  N.  W.  741;  Rowland  v.  Gallatin,  75 
Mo.  134,  42  Am.  Rep.  395;  Bigby  v.  U.  S.,  188  U.  S.  400,  409,  47  L.  Ed.  519, 
aff'g  103  Fed.  597.  See  Smith  v.  Rochester,  76  N.  Y.  506;  Ft.  Edward  v.  Fish, 
156  X.  Y.  363,  .50  N.  E.  973;  Morrison  v.  Lawrence,  98  Mass.  219;  Cavanagh 
V.  Boston,  139  Mass.  426,  1  N.  E.  834,  52  Am.  Rep.  716;  Seele  v.  Deering,  79 
Me.  31.3,  10  Atl.  45.  And  see  Fountain  v.  Sacramento,  1  Cal.  App.  461,  82 
Pac.  637. 

176 


CHAP.  XVII  ]     WHEN    PUBLIC   CONTRACT   IMPLIED  [§111 

make  it  liable  for  water  used  from  the  well.^  Nor  does  the 
employment  of  an  attorney  by  the  governing  body  of  a 
municipality  to  defend  a  policeman  for  an  assault  amount 
to  an  adoption  of  his  conduct  so  as  to  make  the  munici- 
pality liable  for  the  damages  recovered  against  the  officer.  ^ 
A  municipality  is  liable  as  a  hold-over  lessee  on  an  im- 
plied contract  for  use  and  occupation  of  realty.^  And  it  is 
liable  to  pay  the  reasonable  value  of  the  use  of  a  private 
dwelling  for  pest-house  purposes  even  though  it  get  posses- 
sion through  a  trick  or  trespass  as  long  as  its  charter  au- 
thorizes it  to  keep  a  pest  house  or  hospital.^  The  mere  fact 
that  a  tort  accompanies  its  act  will  not  change  the  act  if  it 
be  sufficient  to  imply  a  contract  for  an  authorized  purpose.^ 

§  111.  Volunteer. 

Where  services  are  rendered  without  any  request  from 
the  public  body  therefor,  and  even  with  the  knowledge 
of  its  officers,  even  though  the  public  body  is  benefited 
thereby,  it  cannot  be  made  liable  as  no  implied  contract  can 
arise  from  the  rendition  of  purely  voluntary  services.^ 
It  is  in  like  manner  an  elementary  principle  in  an  action 
to  recover  back  moneys  paid  and  expended  by  one  for 
another,  that  money  voluntarily  paid  cannot  be  recovered 
back.  In  order  to  support  such  an  action  it  is  essential 
that  a  request,  on  the  part  of  the  one  benefited,  to  make 
such  payment,  either  expressly  or  by  fair  impHcation  from 

1  Wilson  V.  Mitchell,  supra. 

2  Buttrick  v.  Lowell,  83  Mass.  (1  Allen)  172. 

3  Witt  V.  New  York,  6  Robt.  441;  Commercial  W.  Co.  v.  Boston,  208  Mass. 
482,  94  N.  E.  805. 

*  Bodewig  v.  Pt.  Huron,  141  Mich.  564,  104  N.  W.  769. 

5  Ide7n. 

8  Holmes  v.  Kansas  City,  81  Mo.  137;  Woods  v.  Ayres,  39  Mich.  345;  Bd.  of 
Commrs.  v.  Harrison,  20  La.  Ann.  201;  Baltimore  v.  Hughes,  1  Gill.  &  J.  (Md.) 
480,  19  Am.  Dec.  243;  Coleman  v.  U.  S.,  152  U.  S.  96,  38  L.  Ed.  368i  Boston 
V.  Dist.  of  Columbia,  19  Ct.  CI.  31;  Barnert  v.  Paterson,  48  N.  J.  L.  395, 6  Atl.  15. 

177 


§111]  CREATION   OF   THE   CONTRACT  [  PART  II 

the  circimistances,  be  proved.^  The  claim  that  a  party 
was  requested  to  act  is  not  the  subject  of  a  presumption 
but  is  a  substantive  fact  which  must  be  proved  since  it  Hes 
at  the  very  foundation  of  the  claimed  right  of  recovery.^ 
Moneys,  given  voluntarily  to  aid  and  assist  a  person  without 
expectation  of  reimbursement,  are  accordingly  not  recover- 
able back.^ 

The  mere  acceptance  and  use  of  property  is  insufficient, 
therefore,  to  create  an  implied  habiiity  on  the  part  of 
the  public  body  to  pay  for  it.'*  And  similarly  a  voluntary 
performance  of  work,  labor  or  services  will  not  give  rise 
to  a  promise  to  pay  upon  an  implied  contract,^  unless  such 
services  or  the  use  of  the  property  be  ratified  through 
acceptance  of  such  by  persons  authorized.^  No  person 
can  make  himself  the  creditor  of  a  public  body  by  volun- 
tarily discharging  a  duty  which  belongs  to  that  other.^ 
Upon  this  principle  it  has  been  declared  that  acceptance 
and  use  ^dth  knowledge  of  the  governing  body  of  a  munici- 

1  Albany  v.  McNamara,  117  N.  Y.  168,  172,  22  N.  E.  931. 
^Albany  v.  McNamara,  supra;  People  v.  Brooklyn,  21  Barb.  484;  U.  S.  v. 
Ross,  92  U.  S.  281,  23  L.  Ed.  707. 

3  Deer  Isle  v.  Eaton,  12  Mass.  328;  Medford  v.  Learned,  16  Mass.  215; 
Albany  v.  McNamara,  supra. 

4  Alton  V.  MuUedy,  21  111.  76;  Jeffersonville  v.  Louisville  &  J.  S.  F.  Co.,  27 
Ind.  100,  89  Am.  D.  495;  New  Jersey  Car.  Spring  Co.  v.  Jersey  City,  64  N.  J.  L. 
544,  46  Atl.  649;  Salsbury  v.  Pliiladelphia,  44  Pa.  St.  303;  Siebrecht  v.  New 
Orleans,  12  La.  Ann.  491;  Forehand  v.  U.  S.,  23  Ct.  CI.  477;  Duloff  v.  Ayer, 
162  Mass.  569,  39  N.  E.  191;  Boston  Elec.  Co.  v.  Cambridge,  163  Mass.  64,  39 
N.  E.  787;  Virginia  City  G.  Co.  v.  Virginia  City,  3  Nev.  320. 

5  Jeffersonville  v.  Steam  Ferrj-boat,  35  Ind.  19;  Baltimore  v.  Poultney,  25 
Md.  18;  Haughwout  v.  Mayor  of  N.  Y.,  2  Keyes,  419;  Lydecker  v.  Nyack,  6 
N.  Y.  App.  Div.  90;  DoUoff  v.  Ayer,  162  Mass.  569,  39  N.  E.  191. 

*  Boston  Elec.  Co.  v.  Cambridge,  supra;  Harrison  County  v.  Bline,  34  Ind. 
App.  352,  72  N.  E.  1034;  Morgan  County  v.  Seaton,  122  Ind.  521,  24  N.  E. 
213;  Huntington  County  v.  Boyle,  9  Ind.  296;  Moon  v.  Howard  County,  97 
Ind.  176;  Fouke  v.  Jackson  County,  84  Iowa,  616,  51  N.  W.  71;  Cleveland 
County  V.  Seawell,  3  Okla.  281,  41  Pac.  592;  Ostendorff  v.  Charleston  Co.,  14 
S.  C.  403. 

'  Salsbury  t^.  Philadelphia,  supra;  Alton  v.  Mulledy,  supra;  Bamert  v^ 
PatersoD,  48  N.  J.  L.  395,  6  Atl.  15. 

178 


CHAP.  XVII  ]     WHEN   PUBLIC   CONTRACT  IMPLIED  [§111 

pality  will  not  suffice  to  create  an  implied  contract.'  The 
contrary  has,  however,  been  declared  and  municipalities 
have  been  made  to  pay  for  gas  furnished  with  knowl- 
edge of  its  governing  body.-  But  acceptance  and  use 
without  the  knowledge  of  the  governing  body  cannot 
be  made  the  foundation  of  an  implied  obligation.^  It  is 
said  that  the  only  safe  rule  is  to  hold  public  bodies  not 
bound  unless  there  is  an  authorization  expressed  by  a  reso- 
lution of  the  council,  and  so  where  furnishings  were 
delivered  for  a  court  room  upon  the  order  of  judicial 
authorities  without  sanction  or  knowledge  of  the  council 
and  were  worn  out  before  the  bill  was  presented,  there 
could  be  no  implied  contract  to  pay  for  them.'*  By  a 
parity  of  reasoning  it  was  declared  that  where  fire  hose 
the  property  of  a  resident  was  used  by  a  municipal  fire 
department  by  mistake,  because  intermixed  with  hose  be- 
longing to  the  town,  and  its  use  was  under  a  belief  that  it 
belonged  to  the  town  no  implied  contract  to  pay  for  it  or 
its  use  arises.^ 

Where,  however,  an  officer  is  required  by  law  to  perform 
a  duty  involving  the  disbursement  of  money  out  of  his 
own  pocket,  the  law  will  not  consider  him  a  volunteer,  but 
will  require  his  reimbursement.^  And  where  the  law 
imposes  an  obligation  upon  a  pubUc  body  which  it  refuses 
to  perform,  while  one  volunteering  to  perform  may  not 
become  a  creditor,  nevertheless  it  may  be  held  liable  upon 
an  implied  contract  at  the  suit  of  one  who  suffers  damage 
in  consequence  of  its  refusal  to    perform  such  duty.^ 

1  New  Jersey  Car  Spring  Co.  v.  Jersey  City,  64  N.  J.  L.  544,  46  Atl.  649. 

2  San  Francisco  Gas  Co.  v.  San  Francisco,  9  Cal.  453. 
'  Seibrecht  v.  New  Orleans,  12  La.  Ann.  496. 

6  Dolloff  V.  Ayer,  162  Mass.  569,  39  N.  E.  191. 
'  Bamert  v.  Paterson,  supra. 
'  Seagraves  v.  Alton,  13  III.  366. 

179 


CHAPTER  XVIII 

LETTING   OF   PUBLIC    CONTRACTS 

§112.  Conditions  Precedent. 

\ATien  a  statute  confers  on  a  public  officer  the  power  to 
enter  into  a  contract  and  requires  the  officer  to  advertise 
for  bids  before  making  the  contract,  such  advertising  is  a 
condition  precedent  to  the  grant  of  authority  and  without 
the  advertising  there  is  no  authority.  Hence  any  contract 
not  made  through  advertising  for  bids,  when  so  required, 
is  void.^  In  Uke  manner,  the  requirement  of  statutes  that 
there  must  be  a  prior  appropriation,  ^  a  provision  in  the 
tax  levy,^  approval  by  the  head  of  department,*  or  a  vote 
of  certain  electors,  are  all  conditions  precedent  to  the 
making  of  a  valid  contract  where  they  are  required  by 
statute.  The  making  of  definite  plans  and  specifications,^ 
of  a  contract  in  writing  ^  and  the  opening  of  bids  in  the 
presence  of  named  officials  are  likewise  conditions  prece- 
dent which  must  be  fulfilled  before  an  enforceable  contract 
can  result.^  These  various  provisions  of  law  are  not 
merely  permissive  but  mandatory. 

§  113.  Necessity  for  Plans  and  Specifications. 

Most  public  contracts  are  awarded  to  contractors  for 

1  Hartford  v.  Hartford  Elec.  L.  Co.,  65  Conn.  324,  32  Atl.  925;  Schumm  v. 
Seymour,  24  N.  J.  Eq.  153. 

^  See  cases,  §§  145  and  146,  post. 

'  Pt.  JervLs  W.  Co.  v.  Pt.  Jervis,  151  N.  Y.  Ill,  45  N.  E.  388. 

*  See  §  130,  post,  and  cases. 

'  Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219. 

«  Edge  Moor  Bridge  Works  v.  Bristol  County,  170  Mass.  528,  49  N.  E.  918; 
Wellston  V.  Morgan,  59  Ohio  St.  149,  52  N.  E.  127. 

^  People  ex  rel.  Rodgers  v.  Coler,  35  N.  Y.  App.  Div.  401. 

180 


CHAP.  XVIII  ]      LETTING    OF   PUBLIC   CONTRACTS  [  §  113 

public  work  after  advertisement  for  proposals  or  bids  to  do 
the  work,  and  the  competitive  bids  thus  obtained  are  the 
basis  of  an  award  to  the  lowest  bidder  under  statutes 
existing  in  most  jurisdictions  requiring  such  manner  of 
public  letting  to  be  followed.  In  most  jurisdictions  there 
is  a  maximum  amount  fixed  for  letting  of  contracts  without 
competitive  bidding. 

Contracts  exceeding  such  amount  are  invalid  unless  the 
manner  of  letting  is  substantially  followed,  as  such  statutes 
are  considered  mandatory.  Even  where  the  statutes  have 
not  specifically  required  plans  and  specifications,  the 
courts  have  declared  that  in  order  to  comply  with  these 
statutes,  it  is  essential  that  plans  and  specifications  of 
reasonable  definiteness  as  to  work,  which  is  required  to  be 
let  by  public  competitive  bidding,  should  be  prepared  in 
advance  of  the  bids.  These  plans  and  specifications  are 
absolutely  essential  to  form  a  basis  of  competition  and 
they  must  be  of  sufficient  definiteness  to  require  competi- 
tion on  every  material  item,  and  they  must  state  the 
quantity  of  work  as  definitely  as  practicable.^ 

The  object  of  letting  pubHc  work  to  the  lowest  bidder 
after  inviting  pubUc  bids  is  to  preclude  favoritism  and 
jobbing  on  the  part  of  pubUc  officials  in  whom  authority 

1  Brady  v.  New  York,  20  N.  Y.  316;  Matter  of  Merriam,  84  N.  Y.  596; 
Matter  of  Rosenbaum,  119  N.  Y.  24,  23  N.  E.  172;  Matter  of  Anderson,  109 
N.  Y.  554,  17  N.  E.  209;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Tifft 
V.  Buflfalo,  25  App.  Div.  376,  164  N.  Y.  605,  58  N.  E.  1093;  Gage  v.  New  York, 
110  N.  Y.  App.  Div.  403;  Andrews  v.  Ada  County,  7  Idaho,  453,  63  Pac.  592; 
Wells  V.  Burnham,  20  Wis.  112;  Ricketson  v.  Milwaukee,  105  Wis.  591,  81 
N.  W.  864;  Coggeshall  v.  Des  Moines,  78  Iowa,  235,  41  N.  W.  617;  Fones  Bros. 
Hdw.  Co.  V.  Erb,  54  Ark.  645,  17  S.  W.  7;  Wilkins  v.  Detroit,  46  Mich.  120,  8 
N.  W.  701;  Mazet  v.  Pittsburgh,  137  Pa.  548,  20  Atl.  693;  Littler  v.  Jayne, 
124  111.  123,  16  N.  E.  374;  Wilson  v.  CoUingswood,  80  N.  J.  L.  626,  77  Atl. 
1033;  Huntington  County  v.  Pashong,  41  Ind.  App.  69,  83  N.  E.  383;  Yaryan 
V.  Toledo,  28  Ohio  C.  C.  278,  76  Ohio  St.  584,  81  N.  E.  1199;  Hannan  v.  Bd.  of 
Education,  25  Okla.  372,  107  Pac.  646. 

181 


§  113  ]         CREATION  OF  THE  CONTRACT       [  PART  H 

to  make  contracts  is  vested  and  to  whom  the  supervision 
of  the  execution  of  contracts  is  intrusted.^ 

To  permit  each  bidder  to  propose  his  plans  and  specifica- 
tions not  only  prevents  competition  but  opens  the  door 
to  favoritism,  and  wipes  out  the  standard  by  which  the 
pubhc  body  may  determine  who  is  the  lowest  bidder.^ 
The  omission  in  proposals,  therefore,  to  pro\'ide  sufficiently 
definite  specifications  which  are  furnished  to  the  bidder,  or 
to  require  the  bidder,  where  the  statute  does  not  prohibit 
it,  to  furnish  definite  specifications  to  accompany  his  bid,  is 
not  a  mere  irregularity  but  is  a  direct  violation  of  such 
statute,  and  although  the  work  under  a  contract  has  been 
perfonned  and  the  public  body  has  the  benefit  of  it,  there 
can  be  no  recovery  upon  such  a  contract.^  Where  the 
advertisement  states  in  general  terms  the  character  and 
extent  of  the  work  and  informs  an  intending  bidder 
that  plans  and  drawings  which  are  a  part  of  the  specifica- 
tions may  be  seen  at  a  public  office,  and  he  is  there  shown 
such  plan,  he  is  justified  in  submitting  his  bid  based  upon 
what  he  is  shown,  in  the  absence  of  any  hint  or  suggestion 
that  there  are  other  more  detailed  plans  in  existence;  and 
when  later  he  is  required  to  perform  more  costly  work 
in  accordance  with  other  plans,  he  may  recover  as  for  a 
breach  of  the  contract  the  extra  cost.^ 

But  where  he  has  had  presented  to  him  an  agreement 
which  he  accepts  which  is  precise  and  strict  in  its  require- 
ments he  cannot  claim  reliance  on  plans  on  file  in  munic- 
ipal  offices,    which   accompanied   prior  grading   contracts 

1  Brady  v.  New  York,  20  N.  Y.  312;  Gage  v.  New  York,  supra;  Ertle  v.  Leary, 
114  Cal.  238,  46  Pac.  1;  Packard  v.  Hayes,  94  Md.  233,  51  Atl.  32. 

2  Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Ertle  v.  Leary,  sujrra. 
'  Hart  V.  New  York,  suj/ra. 

*  Beckwith  v.  New  York,  148  N.  Y.  App.  Div.  658,  210  N.  Y.  530,  103  N.  E. 
1121. 

182 


CHAP.  XVIII  ]      LETTING   OF   PUBLIC    CONTRACTS  [§1^3 

affecting  the  same  roadways,  for  these  constitute  no 
representation  to  bidders  upon  the  proposals  for  contracts 
as  to  any  fact  and  are  not  in  their  nature  a  warranty.^ 
While  the  manner  of  letting  public  contracts  provided  by 
statute  is  the  measure  of  power  and  controls  the  conduct 
of  public  officials,  it  nevertheless  does  not  deprive  him  of 
the  exercise  of  reasonable  discretion  and  care  in  the  public 
interest.  Public  officials  have  the  power,  therefore,  to 
insert  in  the  proposals  provisions  intended  to  exclude 
irresponsible  bidders  from  competition.  Conditions  prece- 
dent to  considering  proposals  may  properly  be  included  in 
the  specifications,  which  will  require  prospective  bidders 
to  give  proof  of  their  capacity  to  furnish  the  necessary 
materials,  plant  and  means  to  complete  the  work.  They 
may  also  be  required  to  furnish  satisfactory  evidence  that 
they  have  installed  the  type  of  work  or  materials  required 
in  the  contract.-  These  provisions  are  inserted  for  the 
benefit  of  the  city  and  not  for  other  or  higher  bidders  and 
may  not  be  taken  advantage  of  by  them.^  Proposals  and 
plans,  and  specifications  accompanying  them,  if  so  ambig- 
uous as  to  prevent  fair  competition  among  bidders,  cannot 
result  in  a  valid  contract.^  Nor  may  they  be  indefinite  in 
amount,  for  if  this  were  permitted  an  advertisement  for  a 
small  amount  of  work,  so  small  as  not  to  induce  bidders 
to  assemble  a  plant  and  organization,  might  be  let  at  an 
extravagant  price  and  subsequently  enormously  enlarged  in 
the  discretion  of  some  public  officer.^      Where  no  plans 

1  Dunn  V.  New  York,  205  N.  Y.  342,  98  N.  E.  495. 

2  Nathan  t*.  O'Brien,  117  N.  Y.  App.  Div.  664;  Knowles  v.  New  York,  37 
Misc.  195,  176  N.  Y.  430,  68  N.  E.  860. 

^  Nathan  v.  O'Brien,  supra. 

*  Gage  V.  New  York,  110  N.  Y.  App.  Div.  403;  Piedmont  Pav.  Co.  v.  Allman,. 
136  Cal.  88,  68  Pac.  493. 

^  Morris  &  Cummings  Dredging  Co.  v.  New  York,  116  N.  Y.  App.  Div.  257, 
193  N.  Y.  678,  87  N.  E.  1123;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219. 

183 


§  113  ]         CREATION  OF  THE  CONTRACT       [  PART  II 

and  specifications  are  submitted  with  a  bid,  it  is  practically 
impossible  for  bidders  to  compete  with  one  another  on  a 
common  basis  of  work  to  be  done  and  materials  to  be 
furnished,  and  the  question  of  determining  who  is  the 
lowest  bidder  is  left  to  the  discretion  and  judgment  of 
pubUc  officers.  Under  such  conditions,  a  bid  made  and 
contract  entered  into  in  response  thereto  are  illegal.^  A 
mere  sunmaary  of  the  general  results  to  be  accompUshed 
by  the  work  cannot  furnish  a  basis  for  real  competitive 
bids,  which  may  be  subjected  to  an  intelligent  and  uniform 
test  for  the  purpose  of  determining  which  is  the  lowest.^ 

So  also  a  proposal  which  allows  a  bidder  to  select  out 
of  many  methods  or  systems  of  accomphshing  a  work  or 
erecting  a  plant,  the  method  which  the  bidder  prefers,  is 
invalid.  The  duty  of  selection  of  a  type,  a  system,  a 
method  or  a  plan  is  upon  pubHc  officers  under  these 
statutes  and  they  must  choose  out  of  those  which  are 
available  the  one  to  be  adopted  or  constructed.  The 
allowing  of  each  bidder  to  submit  his  own  independent 
proposition  as  to  anything  which  would  form  an  important 
element  of  the  contract  violates  the  statute.^ 

If  the  known  standard  systems  for  the  work  in  hand 
involve  such  radically  different  theories  that  bids  cannot 
be  based  on  a  common  set  of  specifications,  the  obligation 
rests  upon  the  pubhc  officers  to  adopt  what  seems  the 
most  promising  system  and  make  appropriate  specifica- 
tions for  it  or  to  call  for  bids  on  any  one  of  the  different 
systems  upon  which  such  bids  are  to  be  received.     If  the 

1  Hart  V.  New  York,  supra;  Packard  v.  Hayes,  supra. 

2  Hart  V.  New  York,  sujn-a;  Ricketson  v.  Milwaukee,  105  Wis.  591,  81  N.  W. 
864;  Fones  Hardware  Co.  v.  Erb,  54  Ark.  645,  17  S.  W.  7;  Ertle  v.  Leary, 
sujjra;  Packard  v.  Hayes,  supra;  Mazet  v.  Pittsburgh,  137  Pa.  St.  548,  20  Atl. 
693;  Bennett  v.  Emmetsburg,  138  Iowa,  67,  115  N.  W.  582. 

'  Packard  v.  Hayes,  supra. 

184 


CHAP.  XVIII  ]      LETTING   OF   PUBLIC   CONTRACTS  [§113 

right  is  reserved  to  reject  any  and  all  bids,  the  public 
authorities  may  then  make  a  choice  and  a  lawful  award. ^ 
While  objection  has  been  made  to  the  latter  course  as 
shifting  the  responsibility  of  selecting  the  type  or  system 
from  the  public  official  to  the  contractor,  the  hypothesis 
outlined  seems  to  exclude  that  result.^  Where  a  proposed 
contract  authorizes  changes  in  the  character  of  the  work 
and  materials  which  might  involve  expenditures  in  excess 
of  the  statutory  amount  fixed  for  non-competitive  letting, 
and  delegates  to  the  engineer  the  exclusive  right  to  deter- 
mine the  additional  amount  to  be  paid,  it  is  invalid,  since 
it  confers  the  exercise  of  a  discretion  and  power  not  vested 
by  law  in  the  public  officials  and  violates  the  statute 
regulating  the  manner  of  letting.^ 

Where  specifications  call  for  alternative  kinds  of  material 
of  greater  difference  in  value  and  the  plans  are  drawn 
wdth  dimensions  which  are  sufficient  for  one  kind  of  mate- 
rial, and  the  contract  is  ambiguous  as  to  who  shall  decide 
which  of  the  materials  shall  be  used,  the  contract  and 
specifications  are  so  indefinite  that  full  and  free  competi- 
tion which  the  charter  provisions  require  cannot  be  had.* 
Public  officials  are  not  restricted  in  their  efforts  to  obtain 
the  best  quality  of  work  and  materials  for  the  public  body 
they  represent,  and  accordingly  they  may  limit  the  kind 
or  quafity  of  materials  to  be  used,  as  long  as  they  leave 
the  purchaser  free  to  procure  it  in  the  open  market  and  do 
not  limit  him  by  fixing  a  price  or  otherwise.  Where  the 
product  of  a  particular  manufacturer  is  of  a  generally 
recognized  excellence,  pubhc  officials  who  are  required  by 
statute  to  award  contracts  to  the  lowest  bidder  may,  like 

1  Hart  V.  New  York,  supra;  Baltimore  v.  Flack,  104  Md.   107,  64  Atl."702T 

2  Hart  V.  New  York,  supra. 

3  Gage  V.  New  York,  110  N.  Y.  App.  Div.  403. 
*  Idem. 

185 


§113]  CREATION   OF   THE    CONTRACT  [  PART  H 

private  individuals,  call  for  it  in  proposals  for  bids  in 
preference  to  similar  products.^  But  they  have  no  right  to 
fix  a  price  in  the  advertisement  for  a  portion  of  the  work.^ 
Fixing  a  price  for  earth  excavation  as  a  stated  proportion 
of  the  price  to  be  given  by  the  bidder  for  rock  excavation 
is  not  an  interference  with  fan-  competition.^  Specifica- 
tions which  state  the  quality  of  materials  required  but  not 
the  quantities  are  invalid  as  there  can  be  no  competitive 
bidding  in  a  contract  of  that  description,  for  unless  quanti- 
ties are  stated  there  can  be  no  comparison  of  bids.'*  If 
from  the  facts  and  data  given  all  bidders  are  enabled  to 
know  by  computation  what  material  would  be  needed  and 
the  quantities,  the  specifications  are  valid. ^  But  where 
bids  are  called  for  under  conditions  which  are  calculated 
to  practically  exclude  competition,  the  contract  will  not  be 
upheld.^  Where  a  pubhc  body  fails  to  provide  specifica- 
tions which  are  sufficiently  definite  to  enable  a  contractor 
to  complete  his  work,  unless  he  is  given  full  discretion  in 
this  regard,  it  is  unreasonable  to  require  him  to  take  daily 
instructions  and  he  is  entitled  to  additional  plans  before  he 
can  be  required  to  proceed  with  the  work.'^  Bids  may  call 
for  the  use  of  alternative  materials  where  the  interests  of 
the    public  body  are  fully    protected.^     And  if  it  is  im- 


1 


^  Knowles  v.  New  York,  37  Misc.  195,  176  N.  Y.  430,  68  N.  E.  860. 

2  Matter  of  Manhattan  Sav.  Inst.,  82  N.  Y.  142;  Matter  of  Merriam,  84 
N.  Y.  596;  Re  Mahan,  81  N.  Y.  621;  Re  Met.  G.  L.  Co.,  85  N.  Y.  526;  Re 
Pelton,  85  N.  Y.  651;  Re  Paine,  26  Hun,  431,  89  N.  Y.  605;  Re  Rosenbaum, 
119  N.  Y.  24,  23  N.  E.  172;  Lamed  v.  Syracuse,  17  N.  Y.  App.  Div,  19;  Smith 
V.  Syracuse,  161  N.  Y.  484,  55  N.  E.  1077. 

3  Matter  of  Marsh,  83  N.  Y.  431. 

*  Bigler  t-.  Mayor,  5  Abb.  N.  C.  51,  69. 

5  Jenney  v.  Des  Moines,  103  Iowa,  347,  72  N.  W.  550. 

« Kay  V.  Monroe,  93  N.  Y.  App.  Div.  484. 

'  Delafield  v.  Westfield,  41  N.  Y.  App.  Div.  24,  169  N.  Y.  582,  62  N.  E. 
1095. 

8  Gilmore  v.  Utica,  131  N.  Y.  26,  29  N.  E.  841;  Schieflfelin  v.  New  York,  65 
Misc.  609;  Lentilhon  v.  New  York,  102  N.  Y.  App.  Div.  548;  Walter  v.  Mcr 

186 


CHAP.  XVIII  ]      LETTING   OF   PUBLIC    CONTRACTS  [§114 

possible  because  of  the  character  of  the  work  to  determine 
the  amount  of  work  to  be  done,  lump  sum  bids  for  all  the 
work  or  unit  prices  based  upon  estimated  quantities  are 
permitted.^  Unbalanced  bids  which  do  not  materially 
enhance  the  aggregate  cost  of  the  work  are  not  ground  of 
complaint.^ 

§  114.  Notice  for  Proposals  and  Bids — Necessity  of  Ad- 
vertising. 
The  purpose  of  the  statutes  requiring  advertising  for 
proposals  upon  all  public  work  is  to  create  genuine  com- 
petition in  bidding  and,  therefore,  the  time  during  which 
and  the  medium  in  which  such  advertisement  shall  appear 
are  material  matters  which  must  be  strictly  comphed  with 
to  make  a  valid  contract  or  create  a  valid  assessment.  It 
is  essential  that  bidders,  so  far  as  possible,  be  put  upon 
terms  of  perfect  equality  and  that  they  be  permitted  to  bid 
on  substantially  the  same  proposition  and  upon  the  same 
terms.  Accordingly,  a  valid  contract  in  accordance  with 
these  statutes  can  only  be  made  after  the  pubUc  body  has 
advertised  for  bids  and  then  only  upon  a  bid  tendered  in 
response  to  such  advertisement.  Every  substantial  re- 
quirement of  the  statute  intended  for  the  protection  of  the 
pubhc  and  property  owners  must  be  compUed  with  or  the 
contract  will  be  invaUd.^     These  statutes  are  mandatory 

CleUan,  113  N.  Y.  App.  Div.  295,  190  N.  Y.  505,  83  N.  E.  1133;  ConnersviUe 
V.  Merrill,  14  Ind.  App.  303,  42  N.  E.  1112;  Barber  A.  P.  Co.  v.  Gaer,  115  Ky. 
334,  73  S.  W.  1106;  Baltimore  v.  Flack,  104  Md.  107,  64Atl.  702;  Detroit  v. 
Hosmer,  79  Mich.  384,  44  N.  W.  622;  Nusff  v.  Cameron,  134  Mo.  App.  607, 
114  S.  W.  1125,  117  S.  W.  116;  Dixey  v.  Atlantic  City  &c.  Co.,  71  N.  J.  L.  120, 
58  Atl.  370. 

1  O'Brien  v.  Mayor,  139  N.  Y.  543,  35  N.  E.  323;  Walter  v.  McClellan,  113 
N  Y.  App.  Div.  295,  190  N.  Y.  505,  83  N.  E.  1133. 

2  Re  Anderson,  109  N.  Y.  554,  17  N.  E.  209. 

»  Mut  Life  Ins.  Co.  v.  Mayor,  144  N.  Y.  494,  39  N.  E.  386;  Tifft  v.  Buffalo, 
25  N  Y  App.  Div.  376,  164  N.  Y.  605,  58  N.  E.  1093;  Re  Pennie,  108  N.  Y. 
364,  15  N.  E.  611;  Hart  v.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Hewes  v. 

187 


§114]  CREATION   OF  THE    CONTRACT  [  PART  II 

and  the  evils  which  they  are  designed  to  prevent  can  only 
be  circumvented  by  construing  these  restrictive  statutory 
provisions  so  as  to  accomplish  the  objects  intended.  The 
preUminary  steps  leading  up  to  the  contract  are  conditions 
precedent  to  the  power  of  the  public  body  to  enter  into 
the  contract.^  Requiring  the  notice  to  be  published  a 
certain  number  of  weeks  in  a  stated  number  and  class  of 
publications  is  a  requirement  and  a  condition  preced- 
ent which  must  be  strictly  followed.-  Provision  for 
publication  in  five  successive  numbers  of  an  official  paper 
implies  that  the  plans  and  specifications  referred  to  in  the 
notice  shall  be  on  exhibition  during  all  these  days  to  have 
proceedings  vahd.^  The  advertisement  or  notice  should 
itself  contain  the  essential  elements  required  to  give  due 
notice  of  the  nature  and  extent  of  the  work  or  supplies, 
the  quaUty  and  estimated  quantities,  as  near  as  possible, 
of  the  work  to  be  done  or  supphes  to  be  furnished  and 
the  kinds  and  classes  of  such  work  or  supphes.  It  should 
also  state  the  time  within  which  the  work  should  be  done 
or  the  supplies  dehvered,  and  the  location  of  the  work  as 
well  as  a  time  and  place  for  the  receipt  of  proposals.  If 
these  material  matters  are  not  compHed  with  a  vahd 
contract  cannot  be  made.^  It  is  unusual  to  publish  the 
specifications,  but  they  may  be  sufficiently  included  in  the 

Reifl,  40  Cal.  255;  Fairbanks  M.  Co.  v.  North  Bend,  68  Neb.  560,  94  N.  W. 
537;  California  Imp.  Co.  v.  Moran,  128  Cal.  373,  60  Pac.  969;  Duffy  v.  Saginaw, 
106  Mich.  335,  64  N.  W.  581;  Connersville  v.  Merrill,  14  Ind.  App.  303,  42 
N.  E.  1112;  Oakley  v.  Atlantic  City,  63  N.  J.  L.  127,  44  Atl.  651. 

'  McCloud  V.  Columbu.s,  54  Ohio  St.  439,  44  N.  E.  95;  Hewea  v.  Reis,  supra. 

^  McCloud  V.  Columbus,  supra. 

'  Tiflft  V.  Buffalo,  supra. 

*  Hart  I'.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Polk  v.  McCartney,  104 
Iowa,  567,  73  N.  W.  1067;  Windsor  v.  Des  Moines,  101  Iowa,  343,  70  N.  W. 
214;  Inge  v.  Bd.  of  Public  Works,  135  Ala.  187,  33  So.  678;  Heidelburg  v. 
St.  Francois  County,  100  Mo.  69,  12  S.  W.  914;  Detroit  v.  Hosmer,  79  Mich. 
384,  44  N.  W.  622;  Pilcher  v.  English,  133  Ga.  496,  66  S.  E.  163;  Adams  v. 
Essex  County,  205  Mass.  189,  91  N.  E.  557. 

188 


CHAP.  XVIII  ]      LETTING   OF   PUBLIC   CONTRACTS  [§114 

notice  by  reference  and  many  of  the  matters  which  may 
ordinarily  appear  in  the  notice  can  be  set  out  in  specifica- 
tions thus  made  a  part  of  the  notice  and  this  will  be  a 
sufficient  compliance  with  the  statute.^  But  since  in- 
telligent bids  can  only  be  made  after  an  opportunity 
of  inspecting  the  plans  and  specifications  and  learning 
precisely  what  kind  of  work  is  required  and  its  details,  a 
reasonable  interpretation  of  the  statute  requires  that  these 
shall  be  on  file  before  proposals  are  advertised  for  so  as  to 
give  fair  chance  of  competition  among  all  bidders.-  Where 
a  contract  is  advertised  to  be  let  at  the  site  of  a  proposed 
bridge,  letting  of  it  by  outcry  at  a  point  half  a  mile  from 
such  site  is  not  a  compliance  with  law.^  And  additions  and 
alterations  to  public  work  need  not  be  advertised  for 
where  they  are  made  in  good  faith,  the  general  plan  is  not 
changed  and  there  is  no  attempt  to  evade  the  statute.^ 
If  the  notice  fairly  complies  with  the  statute,  slight  ir- 
regularities in  the  giving  of  it  will  be  disregarded.^  Where 
the  statute  specifies  no  length  of  time  of  publication  of  the 
notice,  the  time  of  advertising  must  be  a  reasonable  time." 
But  where  the  statute  does  not  require  that  a  notice  shall 
be  given  inviting  proposals,  this  matter  becomes  one  rest- 
ing in  discretion  and  public  officers  are  not  required  to 

1  Swift  V.  St.  Louis,  180  Mo.  80,  79  S.  W.  172;  Dixon  v.  Greene  County, 
76  Miss.  794,  25  So.  665;  Ampt  v.  Cincinnati,  17  Ohio  C.  C.  516,  60  Ohio  St. 
621,  54  N.  E.  1097;  Owens  v.  Marion,  127  Iowa,  469,  103  N.  W.  381;  but  see 
Wilkins  V.  Detroit,  46  Mich.  120,  8  N.  W.  701,  9  N.  W.  427. 

2  Smith  V.  Syracuse,  17  N.  Y.  App.  Div.  63,  Rev.  O.  G.  161  N.  Y.  484,  55 
N.  E.  1077. 

=>  Sparks  v.  Jasper  County,  213  Mo.  218,  112  S.  W.  265. 

^  Escambia  County  v.  Blount  Const.  Co.,  66  Fla.  129,  62  So.  650. 

5  Potts  V.  PhUadelphia,  195  Pa.  St.  619,  46  Atl.  195;  EUis  v.  Witmer,  134 
Cal.  249,  66  Pac.  301;  Belser  v.  AUman,  134  Cal.  399,  66  Pac.  492;  Newport 
News  V.  Potter,  122  Fed.  321. 

8  Chippewa  Bridge  Co.  v.  Durand,  122  Wis.  85,  99  N.  W.  603;  Augusta  v. 
McKibben,  22  Ky.  Law.  Rep.  1224,  60  S.  W.  291. 

189 


§114]  CREATION    OF   THE  CONTRACT  [  PART  II 

give  notice  but  at  their  option  may  award  a  contract  with- 
out notice.^ 


§  115.  Necessity  of  Advertising — Patented  Articles. 

Where  from  a  consideration  of  the  object  and  purpose  of 
these  provisions  which  restrict  the  letting  of  pubhc  con- 
tracts except  upon  advertisement  for  proposals  and  then  by 
award  to  the  lowest  bidder,  it  appears  that  they  can  be 
made  to  apply  only  by  a  disregard  of  their  plain  purpose 
and  intent,  they  become  inapplicable.^  In  the  case  of 
desired  articles  which  are  patented  and  which  can  be  ob- 
tained from  only  one  person,  manifestly  to  submit  the 
matter  to  public  letting  is  impossible.^ 

Recognizing  the  impossibility  of  such  a  situation,  even 
where  contracts  for  the  use  of  patented  pavements  have 
been  prohibited,  the  prohibition  has  been  made  conditional, 
— namely,  that  the  purchase  of  or  contract  for  patented  ar- 
ticles shall  be  under  such  circumstances  that  there  can  be  a 
fair  and  reasonable  opportunity  for  competition,  the  con- 
ditions for  which  shall  be  prescribed  by  the  public  body.^ 

TMiere  the  scheme  devised  under  such  a  statute  affords 
the  owTiers  of  patented  and  unpatented  pavements  to  join 
in  the  bidding  on  equal  terms  there  is  that  fair  and  reason- 
able opportunity  for  competition  which  meets  the  statute. 
A  contract  to  lay  a  smooth  and  noiseless  pavement  let 
under  such  scheme  is  a  valid  contract.^     An  unpatented 

1  Crowder  v.  Sullivan,  128  Ind.  486,  28  N.  E.  94;  Dillingham  v.  Spartanburg, 
75  S.  C.  549,  56  S.  E.  381. 

2  Baird  v.  Mayor,  96  N.  Y.  567;  Matter  of  Dugro,  50  N.  Y.  513;  Yarnold  v. 
Lawrence,  15  Kan.  103;  Hobart  v.  Detroit,  17  Mich.  246;  Contra,  Dean  v. 
Charlton,  23  Wis.  590;  Nicholson  Co.  v.  Painter,  35  Cal.  699. 

'  Baird  v.  Mayor,  supra;  Matter  of  Dugro,  supra;  Yarnold  v.  Lawrence, 
supra;  Hobart  v.  Detroit,  supra^  Contra,  Dean  v.  Charlton,  supra;  Nicholson 
Co.  V.  Painter,  supra. 

*  Greater  N.  Y.  Charter,  §  1554. 

s  Warren  Bros.  Co.  v.  New  York,  190  N.  Y.  297,  83  N.  E.  59.    See  Rose  v. 

190 


€HAP.  XVIII  ]      LETTING    OF   PUBLIC    CONTRACTS  [§116 

pipe  of  a  type  known  as  a  lock  bar  joint  even  though 
made  by  patented  machinery  is  not  within  such  a  statute.^ 
Where  the  advertisement  for  patented  articles  presents  a 
fair  and  reasonable  opportunity  for  competition,  the  courts 
cannot  interfere  with  an  award.^  It  has  been  said  that 
there  should  be  advertising  even  though  patented  articles  are 
required.^  But  where  the  contract  calls  for  an  exchange 
of  equipment  the  provision  of  an  ordinance  will  not  apply.  ^ 

§  116.  Form  of  Bid. 

Public  bodies  may  invite  bids  in  various  forms  provided 
each  proposal  is  upon  a  definite  and  specific  plan,  and 
attended  by  specifications  covering  every  material  detail  of 
the  work.  These  must  be  free  from  ambiguity  and  suflB- 
ciently  clear  to  afford  bidders  an  opportunity  to  compete. 
This  can  only  be  afforded  by  definite  specifications  to 
which  all  bidders  can  conform.^  Irregularities  in  the  form 
of  the  bid  may  justify  rejection  by  the  public  authorities, 
but  they  may  waive  regulations  made  for  their  protection,® 
unless  such  act  of  waiver  will  permit  the  public  body  to  be 
defrauded  or  damaged.  A  bid  is  not  invalid  because  the 
bidder  or  his  sureties  failed  to  appear  before  the  notary 
who  took  their  verification  or  because  of  misrepresenta- 
tions of  the  sureties  as  to  their  qualifications.'^ 

Low,  85  N.  Y.  App.  Div.  461;  Barber  A.  P.  Co.  v.  New  York,  86  Id.  617; 
Barber  A.  P.  Co.  v.  Willcox,  90  Id.  245;  Kay  v.  Monroe,  93  Id.  484. 

1  Holly  V.  New  York,  128  N.  Y.  App.  Div.  499. 

2  Hastings  Pav.  Co.  v.  Cromwell,  67  Misc.  212. 

3  Newark  v.  Bonnel,  57  N.  J.  L.  424,  31  Atl.  408. 

*  Worthington  v.  Boston,  152  U.  S.  695,  38  L.  Ed.  603. 

5  Van  Reipen  v.  Jersey  City  Mayor,  58  N.  J.  L.  262,  33  Atl.  740;  Moreland 
V.  Passaic,  63  N.  J.  L.  208,  42  Atl.  1058;  Chippewa  Bridge  Co.  v.  Durand,  122 
Wis.  85,  99  N.  W.  603;  In  re  Marsh,  83  N.  Y.  431;  Re  Clamp,  33  Misc.  250. 
Sec.  113,  ante. 

« McCord  V.  Lauterbach,  91  N.  Y.  App.  Div.  315;  Gage  v.  New  York,  110 
N.  Y.  App.  Div.  403. 

^  McCord  V.  Lauterbach,  supra. 

191 


§116]  CREATION    OF   THE    CONTRACT  [  PART  II 

Invalidity  will  not  arise  because  the  price  bid  was 
written  o\er  an  erasure,  without  any  note  of  such  erasure 
ha\dng  been  made,  as  long  as  it  appears  by  affidavit  that 
the  erasure  was  made  before  the  bid  was  verified  or  sub- 
mitted.^ It  is  not  invalid  because  not  signed,  if  the  statute 
only  requires  verification,  and  the  bid  is  verified.^  Nor  is 
it  illegal  and  invalid  because  one  of  the  sureties  on  the  bid 
is  a  member  of  the  municipal  assembly.  This  makes  the 
bid  voidable  at  the  option  of  the  comptroller  who  may 
waive  irregularities  or  even  illegaUties  of  this  kind.^  A 
blank  bid  upon  which  the  names  of  the  bidders  do  not 
appear  is  not  a  bid,  and,  against  strict  provisions  of  law 
providing  how  a  contract  shall  be  made,  cannot  be  the 
basis  of  a  valid  contract.^ 

§  117.  Deposit  of  Bids. 

A  provision  of  a  statute  that  all  bids  shall  be  publicly 
opened  by  the  officers  advertising  for  the  same  and  in  the 
presence  of  the  comptroller,  but  that  such  opening  shall  not 
be  postponed  if  the  comptroller  after  notice  fails  to  attend, 
is  mandatory  and  requires  that  such  opening  shall  not  take 
place  except  in  the  presence  of  the  officers  advertising  for 
bids  or  proposals.  These  must  of  necessity  be  present, 
while  the  absence  of  the  comptroller  can  be  excused.  Such 
provisions  are  salutary  in  their  nature  and  purpose  and  are 
intended  to  prevent  the  manipulation  of  bids  before  they 
come  into  the  hands  of  the  officer  who  is  to  report  them  to 
the  comptroller.  The  public  officer  advertising  may  not 
absent  himself  from  the  opening  and  has  no  power  to  waive 
the  requirements  of  the  statute  and  to  make  that  legal 

1  Matter  of  Clamp,  33  Misc.  250. 

2  Idem. 
'  Idem. 

*  Williams  v.  Bergin,  129  Cal.  461,  62  Pac.  69. 

192 


CHAP.  XVIII  ]       LETTING    OF   PUBLIC    CONTKACTS  [  §  HS 

which  the  law  prohibits.  If  he  is  absent  the  bids  are 
invahd  and  may  not  be  made  the  basis  of  any  further  pro- 
ceedings.^ But  where  the  bids  are  received,  and  an  ad- 
journment is  taken  to  bring  all  the  officers  together,  who 
are  charged  with  the  duty  of  making  the  examination,  and 
they  all  do  come  together  and  act  within  a  reasonable  time, 
the  statute  which  is  merely  directory  in  that  respect  is 
satisfied.  2 

§  118.  Modification  of  Bid. 

A  bidder  who  submits  a  sealed  bid  for  public  work  can- 
not change  it  after  it  is  opened,  nor  may  the  public  au- 
thorities who  receive  the  bid  permit  a  change  in  any 
material  respect.  To  allow  such  a  change  after  bids  are 
opened  violates  the  purpose  and  intent  of  the  statutes 
regulating  competitive  bidding.  It  opens  the  door  to 
favoritism  and  preference  if  not  to  jobbing  and  gross 
fraud.  The  public  authorities  have  power  to  accept  or  re- 
ject bids  as  submitted,  but  they  possess  no  power  to  per- 
mit material  changes  or  amendment  to  be  made  in  the 
terms  or  conditions  of  the  bid.^  Modification  of  a  bid  be- 
fore it  is  accepted  or  acted  on,  but  after  the  time  limited 
for  submission  of  bids,  is  not  permissible  for  like  reasons.* 
Such  a  bid  can  be  regarded  in  no  other  light  than  as  a  new 
bid,  and  as  one  made  after  all  other  competitors  are  led 
to  believe  no  further  bids  will  be  received.  Bidders  would 
not  be  bidding  upon  equal  terms  or  even  upon  the  same 

'  People  ex  rel.  Rodgers  v.  Coler,  35  N.  Y.  App.  Div.  401. 

2  McCord  V.  Lauterbach,  91  N.  Y.  App.  Div.  315. 

3  Chicago  V.  Mohr,  216  111.  320,  74  N.  E.  1056;  State  v.  Bd.  of  Comm'rs 
Douglas  County,  11  Neb.  484,  9  N.  W.  691;  Beaver  v.  Trustees,  19  Ohio  St. 
97;  Boren  v.  Comm'rs  Darke  County,  21  Ohio  St.  311;  Fairbanks,  Morse  & 
Co.  V.  North  Bend,  68  Neb.  560,  94  N.  W.  537;  Dickinson  v.  Poughkeepsie,  75 
N.  Y.  65. 

*  Fairbanks,  Morse  &  Co.  v.  North  Bend,  supra. 

193 


§118]  CREATION   OF   THE   CONTRACT  [  PART  II 

proposition  if  this  were  allowed.^  But  of  course  all  bid- 
ders have  the  right  previous  to  the  opening  of  sealed  pro- 
posals to  modify  their  bids  by  letter  or  telegram.  Before 
acceptance  of  his  bid  there  is  no  valid  or  binding  con- 
tract, and  so  long  as  there  is  no  vahd  contract  a  bidder 
has  the  right  to  change  his  bid  and  insist  that  his  bid  when 
opened  shall  only  be  considered  as  modified.-  He  may  do 
this  without  sacrificing  the  deposit  which  he  has  been  com- 
pelled to  make  as  a  condition  of  bidding.^ 

When  a  bid  is  thus  modified,  it  may  be  accepted  as 
modified  and  a  binding  contract  will  result. 

§  119.  Mistake  in  Bid — Rescission — Relief  in  Equity. 

If  a  bidder  makes  an  unintentional  mistake  in  his  bid, 
he  has  a  right  to  withdraw  his  bid  before  it  is  acted  on.'* 
And  in  the  event  that  a  bid  is  accepted  and  the  mistake 
reveals  itself  then  for  the  first  tune,  if  the  bidder  calls  the 
attention  of  the  public  authorities  to  the  mistake  upon  its 
discovery  he  may  be  relieved  in  equity,^  or  he  may  set  up 
the  facts  in  defense  of  an  action  at  law  for  damages.^ 

Sometimes,  as  a  consequence  of  the  haste  in  which  bids 
are  prepared,  errors  or  omissions  inadvertently  and  unin- 
tentionally creep  into  the  bids,  and  the  bidder  never  con- 

1  Fairbanks,  Morse  &  Co.  v.  North  Bend,  supra;  Dickinson  v.  Poughkeepsie, 
supra. 

2  Thompson  v.  U.  S.,  3  Ct.  CI.  433;  North  Eastern  Cons.  Co.  v.  North  Hemp- 
stead, 121  N.  Y.  App.  Div.  187. 

3  North  Eastern  Cons.  Co.  v.  North  Hempstead,  supra. 

*  Martens  &  Co.,  Inc.  v.  Syracuse,  183  N.  Y.  App.  Div.  622;  Harper  v. 
Newburgh,  159  Id.  695;  New  York  v.  Dowd  Lumber  Co.,  140  Id.  358;  Moffett 
&  Co.  V.  Rochester,  178  U.  S.  373,  44  L.  Ed.  1108;  Northeastern  Cons.  Co.  v. 
North  Hempstead,  121  N.  Y.  App.  Div.  187;  Chicago  v.  Mohr,  216  111.  320, 
74  N.  E.  1056;  Fairbanks  &  Co.  v.  North  Bend,  68  Neb.  560,  94  N.  W.  537; 
Bromagin  v.  Bloomington,  234  lU.  114,  84  N.  E.  700. 

5  Harper  v.  Newburgh,  159  N.  Y.  App.  Div.  695;  Moffett  Co.  v.  Rochester, 
178  U.  S.  373,  44  L.  Ed.  1108. 

8  New  York  v.  Dowd  Lumber  Co.,  140  N.  Y.  App.  Div.  358. 

194 


CHAP.  XVIII  ]      LETTING    OF    PUBLIC    CONTRACTS  [§119 

sciously  or  intentionally  enters  into  an  agreement,  his 
apparent  agreement  being  the  result  of  an  honest  mistake 
in  transcription.  In  such  a  case,  he  may  not  have  reforma- 
tion in  equity  as  this  may  only  be  given  in  cases  of  mutual 
mistake.^  He  may,  however,  have  a  rescission  of  the  con- 
tract ;  for  rescission  may  be  had  for  a  unilateral  mistake.  In 
the  view  of  the  law,  there  w^as  no  meeting  of  the  minds  and 
hence  the  court  may  rescind  the  contract  for  the  apparent 
mistake  of  one  party  only,  and  in  order  to  do  this,  it  is  not 
necessary  that  there  should  be  fraud  or  inequitable  con- 
duct on  the  side  of  the  other  party.  Relief  may  be  had 
from  an  unconscionable  bid  through  rescission  or  cancella- 
tion. ^ 

It  appears  that  relief  may  be  had  against  a  negligent 
omission,  as  long  as  the  bidder  is  not  guilty  of  gross  neg- 
ligence.^ Under  such  circumstances,  injunction  will  not 
be  issued  against  a  return  of  deposit.^  Where  accordingly 
a  bidder  in  preparing  his  estimate  because  of  his  hurry  to 
get  his  bid  in,  by  mistake  turned  two  pages  of  his  book 
instead  of  one  and  thus  omitted  to  carry  forward  a  mate- 
rial portion  of  his  estimate,  making  his  bid  several  thou- 
sand dollars  less  than  he  intended,  the  acceptance  of 
such  a  bid  could  not  create  a  meeting  of  minds  and,  in  eq- 
uity, he  may  have  rescission  and  a  return  of  his  deposit.^ 
In  a  case  of  mistakes  in  figures  aggregating  many  thou- 
sands of  dollars  differing  from  what  a  bidder  intended  to 
make,  there  is  likewise  no  meeting  of  the  minds  and  there 

1  New  York  v.  Dowd  Lumber  Co.,  supra;  Moffett  Co.  v.  Rochester,  supra. 

^  Harper  v.  Newburgh,  supra;  Moffett  Co.  v.  Rochester,  supra;  New  York 
V.  Dowd  Lumber  Co.,  supra;  Board  of  Sch.  Comm'rs  v.  Bender,  36  Ind.  App. 
164,  72  N.  E.  154.  See  New  York  v.  Seeley  T.  Co.,  149  N.  Y.  App.  Div.  98, 
208  N.  Y.  548. 

3  Moffett  Co.  V.  Rochester,  supra;  Barlow  v.  Jones,  87  Atl,  (N.  J.  Eq.)  649. 

^  Barlow  v.  Jones,  supra. 

^  Board  of  Sch.  Comm'rs.  v.  Bender,  supra. 

195 


§119]  CREATION  OF  THE   CONTRACT  [  PART  n 

can  be  no  contract  from  which  reUef  in  equity  will  not  be 
granted  which  will  include  a  return  of  the  deposit.^  Where, 
however,  a  bidder  in  his  proposal  to  perform  work  states 
that  his  information  concerning  the  work  to  be  done  and 
the  materials  to  be  furnished  for  the  completion  of  his 
contract  was  secured  by  personal  investigation  and  not 
from  estimates  furnished  by  the  State,  he  cannot  rely  upon 
a  mere  suggestion,  made  in  the  estimate  sheets  which 
directs  his  inquiry  for  stone  to  an  available  source  of 
supply.  So,  when  it  turns  out  that  stone  is  not  available 
at  such  place,  he  cannot  refuse  to  execute  the  contract  on 
the  claim  of  a  mutual  mistake  of  fact  as  to  the  possibility 
of  obtaining  the  stone  at  such  place.  Accordingly  he  is  not 
entitled  to  a  mandamus,  upon  such  a  state  of  facts,  to 
compel  a  return  of  his  deposit  money  which  is  forfeited  by 
a  refusal  to  execute  the  contract.^ 

WTien  estimates  of  amounts  and  quantities  of  material 
to  be  furnished  and  work  to  be  done  are  not  even  approxi- 
mately correct,  and  whether  they  are  or  not,  could  only  be 
ascertained  by  a  skilled  engineer,  by  correct  scaling  of 
maps  and  plans,  the  statement  that  they  are  approximate 
only  wall  not  prevent  a  contractor  from  obtaining  relief  in 
equity.  Such  a  contract  is  entered  into  under  a  mutual 
mistake  and  if  followed  by  prompt  action  after  a  discovery 
of  the  mistake  will  afford  ground  for  rescission  of  the 
contract.^ 

Similarly  where  courts  can  properly  find  mutual  mistake 
in  a  bid,  such  may  be  the  subject  of  an  action  for  reforma- 
tion, or  for  rescission.'* 

1  Moffett  Co.  V.  Rochester,  supra. 

2  Matter  of  Semper  v.  Duffey,  227  N.  Y.  151,  124  N.  E.  743. 

3  Long  V.  Athol,  196  Mass.  497,  82  N.  E.  665. 

*  U.  S.  V.  Milliken  Imprinting  Co.,  202  U.  S.  168,  50  L.  Ed.  980;  Long  v. 
Athol,  196  Mass.  497,  82  N.  E.  665. 

196 


CHAP.  XVIII  ]      LETTING   OF   PUBLIC   CONTRACTS  [  §  120 

§  120.  Deposit  Money  with  Bids — Forfeiture  Measure  of 
Damage  for  Failure  to  Execute  Contract. 

The  provision  in  statutes  governing  bidding  on  public 
work,  that  a  bond  or  other  security  such  as  cash  or  a  certi- 
Sed  check  shall  accompany  the  bid,  is  mandatory,  and  bids 
proffered  without  a  compliance  therewith  are  a  nullity. 
The  purpose  of  requiring  such  deposit  to  be  made  is  not 
only  to  insure  good  faith  on  the  part  of  bidders  but  to 
indemnify  the  public  body  against  the  expense  of  readver- 
tising.^  Such  deposit  is  also  to  advise  bidders,  if  the  con- 
tract is  awarded  to  them  and  they  refuse  to  enter  into  it, 
the  precise  amount  of  damage  they  will  have  to  pay.  The 
only  damage  a  contractor  can  be  subjected  to  for  refusing 
to  execute  the  contract  after  its  award  to  him  is  the  forfei- 
ture of  his  deposit. 2  The  only  bond  which  the  public  body 
can  require  is  the  statutory  bond.  Where  the  statute 
determines  the  amount  of  the  deposit  to  be  the  amount  of 
the  damage,  a  surety  who  gave  a  bond  conditioned  to  pay 
the  difference  between  the  sum  which  the  bidder  would  be 
entitled  to  on  completion  and  the  sum  the  public  body 
would  be  obligated  to  pay  to  another  contractor  on  relet- 
ting, cannot  be  held  by  the  public  body  to  any  damages 
beyond  those  mentioned  in  the  statute.'  But  where  there 
is  no  such  limitation  in  the  statute,  actual  damage  which  is 
the  increased  cost  is  recoverable. 

A  public  body  may  lawfully  require  a  contractor,  where 
the  amount  is  not  provided  by  statute,  to  furnish  a  bond, 
in  its  discretion,  in  a  reasonable  sum,  which  will  not  pre- 
vent fair  and  honest  competition.^ 

1  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101;  New  York  v.  Seely  Taylor 
Co.,  149  App.  Div.  98,  208  N.  Y.  548,  101  N.  E.  1098;  Matter  of  Semper  v. 
Duffey,  227  N.  Y.  151,  124  N.  E.  743. 

2  New  York  v.  Seely  Taylor  Co.,  supra. 

*  New  York  v.  Seely  Taylor  Co.,  supra;  Selpho  v.  Brooklyn,  5  App.  Div. 
529,  158  N.  Y.  673,  52  N.  E.  1126.  *  Selpho  v.  Brooklyn,  supra. 

197 


§  120  ]  CREATION   OF   THE    CONTRACT  [  PART  II 

And  under  an  ordinance  passed  pursuant  to  lawful  dele- 
gation of  power  it  may  exact  a  bond  in  addition  to  the 
usual  bond,  conditioned  to  pay  materialmen  and  work- 
men.^ In  order  to  forfeit  a  deposit  under  these  statutes, 
it  is  essential  that  the  bidder  have  written  notice  that  the 
contract  has  been  awarded  to  him.^ 

If  the  statute  requires  a  cash  deposit,  a  certificate  of 
deposit  or  certified  check  is  its  equivalent  and  will  satisfy 
the  statute.^  The  award  of  the  contract  constitutes  an 
approval  of  the  sufficiency  of  the  deposit.^ 

Where  a  bidder  has  paid  the  usual  deposit  money  which 
accompanied  a  bid  on  public  work  to  the  public  body,  and 
the  latter  has  accepted  his  bid,  but  the  bidder  refuses  to 
enter  into  a  contract,  he  is  not  estopped  from  showing  that 
the  preliminary  proceedings  were  defective  and  illegal  or 
that  a  contract  if  made  would  be  illegal  and  from  requiring 
a  return  of  his  deposit.^  The  maxim  in  pari  dehcto  potior 
conditio  possidentis  has  no  application  to  such  a  case,  for 
one  who  pays  money  under  an  illegal  contract  may  recover 
it  back  before  the  contract  is  executed.^ 

The  statute  requiring  forfeiture  of  a  deposit  for  failure 
to  enter  into  a  contract  contemplates  a  contract  based 
upon  legal  proceedings.  Where  the  proceedings  are  illegal 
his  bid  is  a  naked  offer  met  and  supported  by  no  considera- 
tion. A  promise  resting  upon  a  consideration  which  has 
totally  failed  is  no  longer  binding,  and  a  deposit  of  money 
accompanying    such    a   promise   is    recoverable    at    law7 

1  Buffalo  Cement  Co.  v.  McNaughton,  90  Hun,  74,  156  N.  Y.  702. 

2  Erving  v.  Mayor,  supra. 

J  People  V.  Contracting  Bd.,  27  N.  Y.  378. 
*  Baird  v.  New  York,  83  N.  Y.  254. 

s  Ferine  Cont.  &  Pav.  Co.  v.  Pasadena,  116  Cal.  6,  47  Pac.  777;  Fairbanks, 
Mor.se  &  Co.  v.  North  Bend,  68  Neb.  560,  94  N.  W.  537. 
6  Fairbanks,  Morse  &  Co.  v.  North  Bend,  supra. 
''  Ferine  Cont.  &  Pav.  Co.  v.  Pasadena,  supra. 

198 


CHAP.  XVIII  ]      LETTING    OF   PUBLIC    CONTRACTS  [  §  120 

In  a  proper  case,  however,  failure  to  execute  the  contract 
forfeits  the  security,  since  this  is  a  term  of  the  agreement 
of  deposit,  and  if  the  provisions  of  the  statute  regarding 
the  forfeiture  are  followed,  no  relief  will  be  granted,  for  a 
party  will  not  be  aided  contrary  to  the  express  terms  of  his 
own  contract.^ 

1  Morgan  Park  v.  Gahan,  136  111.  215,  26  N.  E.  1085;  Erving  v.  New  York, 
131  N.  Y.  133,  29  N.  E.  1101;  New  York  v.  Seely  Taylor  Co.,  149  N.  Y.  App. 
Div.  98,  208  N.  Y.  548,  101  N.  E.  1098;  Matter  of  Semper  v.  Duffey,  227  N.  Y. 
151,  124  N.  E.  743;  Mutchler  v.  Easton,  148  Pa.  St.  441,  23  Atl.  1109;  Langley 
V.  Harmon,  97  Mich.  347,  56  N.  W.  761;  Willson  v.  Baltimore,  83  Md.  203,  34 
Atl.  774;  Middleton  v.  Emporia,  106  Kan.  107,  186  Pac.  981. 


199 


CHAPTER  XIX 

LETTING  TO  LOWEST  BIDDER 

§  121.  Lowest  Bidder — Who  is  Lowest  Bidder — Rules 
Determining. 
If  these  statutes  regulating  competitive  bidding  do  not 
provide  that  pubhc  authorities,  after  inviting  proposals  by 
public  notice,  shall  accept  the  lowest  proposal,  it  is  clear 
that  the  intention  of  the  legislature  is  that  they  shall  make 
such  contract  as  in  their  judgment  the  public  interests  re- 
quire.^ But,  on  the  other  hand,  where  the  intent  of  the 
statute  is  to  require  a  letting  to  the  lowest  bidder,  a  con- 
tract not  so  let  is  illegal  and  void.^ 

§  122.  Limitations  on  Power  to  Reject  Bids. 

The  duty  of  public  officials  in  the  examination  of  pro- 
posals and  the  awarding  of  contracts  is  judicial  in  its  na- 
ture and  character,  and  the  award  is  the  result  of  a  judicial 
act.^     The  award  of  a  contract  when  free  from  fraud, 

1  Knowles  v.  New  York,  176  N.  Y.  430,  68  N.  E.  860;  Baird  v.  New  York,  96 
N.  Y.  567;  Greene  v.  Mayor,  60  N.  Y.  303;  Talcott  v.  Buffalo,  125  N.  Y.  280, 
26  N.  E.  263;  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101;  Mayor  v.  County 
of  Hampden,  141  Mass.  74,  6  N.  E.  757;  Schefbauer  v.  Kearney,  57  N.  J.  L. 
588,  31  Atl.  454;  Oakley  v.  Atlantic  City,  63  N.  J.  L.  127,  44  Atl.  651;  Kun- 
dinger  v.  Saginaw,  132  Mich.  395,  93  N.  W.  914;  State  v.  Lincoln  County,  35 
Neb.  346,  53  N.  W.  147;  Crowder  v.  Town  of  SuUivan,  128  Ind.  486,  28  N.  E. 
94;  Elliott  v.  Minneapolis,  59  Minn.  Ill,  60  N.  W.  1081;  Dillingham  v.  Spartan- 
burg, 75  S.  C.  549,  56  S.  E.  381. 

2  Anderson  v.  Fuller,  51  Fla.  380,  41  So.  684;  Phelps  v.  Mayor,  112  N.  Y. 
216,  19  N.  E.  408;  Walton  v.  Mayor,  26  N.  Y.  App.  Div.  76;  Moran  v.  Thomp- 
son, 20  Wash.  525,  56  Pac.  29;  Weitz  v.  Indep.  Dist.  Des  Moines,  79  Iowa,  423, 
44  N.  W.  696;  Santa  Cruz  R.  P.  Co.  v.  Broderick,  113  Cal.  628,  45  Pac.  863; 
Chicago  V.  Hanreddy,  211  111.  24,  71  N.  E.  834;  LeToumeau  v.  Hugo,  90  Minn. 
420,97  N.  W.  115. 

» Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101;  East  Piver  G.  L.  Co.  v. 

200 


CHAP.  XrX  ]  LETTING   TO   LOWEST   BIDDER  [  §  123 

collusion,  corruption  or  bad  faith  is  not  the  subject  of 
judicial  revision.  When  the  statutes  provide  for  the  letting 
of  the  contract  to  the  lowest  and  best  bidder  or  the  lowest 
responsible  bidder,  such  language  of  course  invests  the 
authorities  with  a  broader  discretion  than  where  it  provides 
merely  for  an  award  to  the  lowest  bidder,  and  when  the 
authorities  in  the  performance  of  their  duty  make  the 
award,  the  courts  may  not  substitute  their  discretion  for 
that  of  the  public  body  vested  with  it  by  law.^ 

But  they  may  not  arbitrarily  refuse  to  accept  the  lowest 
bid  without  any  facts  tending  to  show  that  it  is  not  that  of 
a  responsible  bidder.  Any  arbitrary  determination  to 
accept  the  highest  bid,  without  facts  justifying  it,  cannot 
have  the  effect  of  a  judicial  determination. ^ 

§  123.  Rejecting  all  Bids. 

The  mere  fact  that  a  party  who  has  made  proposals  is 
the  lowest  bidder  does  not  necessarily  entitle  him  to  the 
contract,  nor  does  it  constitute  an  award  of  the  contract  to 
hun  under  the  statutes  regulating  the  letting  of  work  upon 
competitive  bidding.^  Although  the  statute  provides  that 
the  work  shall  be  awarded  to  the  lowest  bidder,  this  lan- 
guage does  not  compel  the  making  of  a  contract  even  with 
such  lowest  bidder.  Where  it  appears  that  the  best  inter- 
ests of  the  public  body  demand  that  none  of  the  bids 

Donnelly,  93  N.  Y.  557;  People  ex  ret.  Coughlin  v.  Gleason,  121  N.  Y.  631,  25 
N.  E.  4;  Brown  v.  Houston,  48  S.  W.  (Tex.)  760. 

1  Inge  V.  Mobile,  135  Ala.  187,  33  So.  678;  Talcott  v.  Buffalo,  125  N.  Y.  280, 
26  N.  E.  263. 

2  Talcott  V.  Buffalo,  su^a;  People  ex  rel.  v.  Kent,  160  111.  655,  43  N.  E.  760; 
State  V.  McGrath,  91  Mo.  386,  3  S.  W.  846;  Interstate  Vitr.  B.  Co.  v.  Philadel- 
phia, 164  Pa.  St.  477,  30  Atl.  383;  Renting  v.  Titusville,  175  Pa.  St.  512,  34 
Atl.  916;  Inge  v.  Mobile,  135  Ala.  187,  33  So.  678;  Schefbauer  v.  Kearney,  57 
N.  J.  L.  588,  31  Atl.  454;  People  ex  rel.  Coughlin  v.  Gleason,  121  N.  Y.  631, 
25  N.  E.  4;  Kelling  v.  Edwards,  116  Minn.  484,  134  N.  W.  221. 

» Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101. 

201 


§  123  ]  CREATION   OF   THE    CONTRACT  [  PART  II 

should  be  accepted,  the  pubhc  authorities,  acting  in  good 
faith,  have  the  right  to  reject  all  bids  and  advertise  over 
again.  ^  By  many  statutes  such  power  is  expressly  reserved 
as  well  as  by  the  terms  of  the  proposals.  By  statute  it  is 
also  provided  in  many  jurisdictions  that  without  rejecting 
all  bids  an  award  may  be  made  to  one  other  than  the 
lowest  bidder  by  the  vote  or  approval  of  the  governing 
body,  or  governing  financial  board  of  the  mimicipality.^ 
But  the  opening  of  bids  and  the  ascertainment  of  who  is 
the  lowest  bidder,  together  with  the  announcement  of  that 
fact,  do  not  constitute  an  award.  The  right  to  the  award  of 
a  contract  or  to  have  a  contract  executed  with  such  lowest 
bidder  does  not  arise  upon  any  of  these  facts.  Public 
officers  still  have  the  right  to  reject  all  bids.^  But  after  a 
bidder  has  been  notified  that  his  bid  is  the  lowest  and 
that  a  contract  will  be  awarded  to  him,  the  public  officials 
have  no  power  to  reject  all  bids  and  readvertise.  The 
rights  of  the  parties  by  such  express  acceptance  become 
fixed." 

§  124.  Making  Award  on  Contingency. 

A  public  officer  or  head  of  department  has  no  power  to 
award  a  contract  conditioned  upon  the  consent  or  approval 
of  other  boards  or  officials.^  A  conditional  acceptance 
of  a  bid  can  confer  no  rights  upon  a  bidder.^    An  accep- 

1  Walsh  V.  Mayor,  113  N.  Y.  142,  20  N.  E.  825;  Molloy  v.  New  Rochelle,  198 
N.  Y.  402,  92  N.  E.  94. 

2  Greater  N.  Y.  Charter,  §  419. 

'  WilUams  v.  New  York,  118  N.  Y.  App.  Div.  756,  192  N.  Y.  541,  84  N.  E. 
1123. 

*  Lynch  v.  New  York,  2  N.  Y.  App.  Div.  213;  Pennell  v.  Mayor,  17  Id.  455; 
Beckwith  v.  New  York,  121  Id.  462;  Williams  v.  New  York,  supra. 

^  Williams  v.  New  York,  118  N.  Y.  App.  Div.  756,  192  N.  Y.  541,  84  N.  E. 
1123. 

« Williams  v.  New  York,  supra;  North  Eastern  Cons.  Co.  v.  North  Hemp- 
stead, 121  N.  Y.  App.  Div.  187. 

202 


CHAP.  XDC  ]  LETTING   TO    LOWEST   BIDDER  [  §  126 

tance,  therefore,  upon  condition  that  an  additional  ap- 
propriation shall  be  made  by  some  other  body  is  in  viola- 
tion of  the  statute  requiring  a  prior  appropriation  as  an 
essential  to  the  validity  of  public  contracts.^ 

Acceptance  upon  condition  that  leave  shall  be  granted 
by  a  board  to  issue  bonds  is  invalid.^  In  like  manner,  a 
bid  accepted  upon  condition  that  it  was  not  to  be  binding 
in  case  certain  legislation  then  pending  was  not  passed 
is  invalid  and  fraudulent,  as  a  mere  attempt  to  defeat  a 
changed  mode  of  entering  into  contracts  from  affecting 
these  bids.^ 

§  125.  Award  to  Lowest  Bidder — Competitive  Bidding 
Statutes — Construed  to  Effect  Purpose. 
These  provisions  of  law  are  of  great  importance  to  the 
welfare  and  interests  of  large  public  corporations  acting 
through  their  public  officers  and  agents  and  were  designed 
to  estabhsh  a  policy  which  should  be  carried  into  effect 
without  technicalities  or  a  narrow  interpretation  which 
will  render  them  of  no  a  vail.  ^  They  are  not  to  be  con- 
strued so  as  to  prevent  the  public  from  doing  the  work 
itself  through  its  own  agencies.^ 

§  126.  Award   of  Public   Contracts — When  no   Statutory 

Conditions  Exist. 

In  the  absence  of  any  of  the  provisions  or  restrictions 

of  the  character  mentioned  in  the  preceding  sections  or  of 

similar  statutory  or  constitutional  hmitations  a  binding 

^  Williams  v.  New  York,  supra. 

2  North  Eastern  Cons.  Co.  v.  North  Hempstead,  supra. 

3  Matter  of  Raymond,  21  Hun,  229,  85  N.  Y.  646. 

4  Greene  v.  Mayor,  60  N.  Y.  303,  318.  See  Knowles  v.  New  York,  176  N.  Y. 
430,  68  N.  E.  860;  People  ex  rel.  Lyon  Co.  v.  McDonough,  173  N.  Y.  181,  65 
N.  E.  963. 

6  Home  Bldg.  &  Con.  Co.  v.  Roanoke,  91  Va.  52,  20  S.  E.  895,  27  L.  R.  A. 
551. 

203 


§  126  ]        CREATION  OF  THE  CONTRACT       [  PART  II 

agreement  may  be  made  by  a  proposal  and  acceptance.* 
The  only  qualification  is  that  the  proposal  of  the  contrac- 
tor shall  be  definite  and  the  acceptance  by  the  public  body 
shall  be  unquaHfied.^ 

§  127.  When  not  Required. 

Where  the  governing  body  of  a  municipality  or  other 
public  corporation  does  not  abuse  its  discretionary  powers 
and  acts  without  fraud  and  within  the  scope  of  its  corpo- 
rate powers,  if  the  charter  or  statute  under  which  it  acts 
does  not  prescribe  the  manner  or  mode  of  entering  into  a 
pubhc  contract,  it  may  award  such  contracts  without 
letting  them  to  the  lowest  bidder.^ 

§  128.  When    Competitive    Bidding  not    Required — Mo- 
nopoly —  Patents  —  Professional   Skill  —  Special 
Knowledge  and  Skill. 
Statutes  providing  that  public  contracts  must  be  based 
upon  sealed  bids  obtained  through  public  advertising  do 
not  apply  if  the  subject-matter  is  such  that  the  supply  to 
be  purchased  is  only  obtainable  from  one  person  which  has 
been  granted  an  exclusive  franchise  or  monopoly  of  the 
commodity  needed.^     Although   there  is  more   than  one 
source  of  supply,  if  there  is  incongruity  in  competing  for 
it,  and  its  selection  involves  choice  of  quality,  quantity 
and   source  resting  largely  upon   special   knowledge   and 
skill  it  comes  within  the  exceptions  and  the  statute  does 
not  apply.^     For  similar  reasons,  such  provisions  fail  of 

1  Denton  v.  Atchison,  34  Kan.  438,  8  Pac.  750;  Middleton  v.  Emporia,  106 
Kan.  107,  186  Pac.  981;  U.  S.  v.  Purcell  En.  Co.,  249  U.  S.  313,  63  L.  Ed.  620. 

2  Howard  v.  Maine  Industrial  School,  78  Me.  230,  3  Atl.  657. 

'  Elliot  V.  Minneapolis,  59  Minn.  Ill,  60  N.  W.  1081;  Yaraold  v.  Lawrence, 
15  Kan.  103. 

*  Harlem  G.  L.  Co.  v.  Mayor,  33  N.  Y.  309;  Hartford  v.  Hartford  Elec.  L. 
Co.,  65  Conn.  324,  32  Atl.  924. 

» Gleason  v.  Dalton,  28  N.  Y.  App.  Div.  555. 

204 


CHAP.  XrX  ]  LETTING   TO   LOWEST  BIDDER  [  §  128 

application  in  the  instance  of  contracts  for  lighting  streets.^ 
The  fact  that  a  particular  kind  of  steel  specified  can  only 
be  obtained  from  one  source  does  not  unlawfully  limit 
competition  where  the  bidder  can  buy  it  in  the  open- 
market. ^  Therefore,  if  there  is  a  monopoly  of  some  proc- 
ess or  article  which  can  only  be  obtained  from  one  source 
the  pubhc  body  may  make  a  contract  for  it  when  it  is  in 
the  pubUc  interest  notwithstanding  the  provisions  of  the 
competitive  bidding  statutes.  They  have  no  application 
to  such  a  case  unless  the  unreasonable  result  of  depriving 
public  corporations  of  the  use  of  all  patented  appliances  or 
processes  and  of  the  benefits  of  modern  invention  is  im- 
ported into  the  intent  and  design  of  such  a  statute.^ 
If,  however,  the  specifications  name  not  a  particular 
commodity  but  the  product  of  a  particular  company  and 
the  article  is  a  common  article  of  manufacture  and  sale, 
the  bid  under  such  specifications  violates  the  provision  of 
law  requiring  work  to  be  let  to  the  lowest  bidder.^  The 
difficulty  which  this  question  of  the  purchase  of  patented 
articles  has  created  has  been  solved  by  legislative  bodies 

1  Blank  v.  Keamy,  44  N.  Y.  App.  Div.  592. 

2  Knowles  v.  New  York,  37  Misc.  195,  74  N.  Y.  App.  Div.  632,  176  N.  Y. 
430,  68  N.  E.  860.    But  here  the  statute  requiring  competition  did  not  applv. 

»  Bye  V.  Atlantic  City,  73  N.  J.  L.  402,  64  Atl.  1056;  Mihier  v.  Trenton,  80 
N.  J.  L.  253,  75  Atl.  939;  Hohnes  v.  Coram.  Coun.  of  Detroit,  120  Mich.  226, 
79  N.  W.  200;  Swift  v.  St.  Louis,  180  Mo.  80,  79  S.  W.  172;  Rackliffe  G.  Cons. 
Co.  V.  Walker,  170  Mo.  App.  69,  156  S.  W.  65;  Field  v.  Barber  A.  P.  Co.,  117 
Fed.  925,  Rev.  O.  G.  194  U.  S.  618;  Baltimore  v.  Flack,  104  Md.  107,  64  Atl. 
702;  Hobart  v.  Detroit,  17  Mich.  246;  La  Coste  v.  New  Orleans,  119  La.  469, 

44  So.  267;  Verdin  v.  St.  Louis,  131  Mo.  36,  33  S.  W.  480;  SUsby  Mfg.  Co.  v. 
AUentown,  153  Pa.  St.  319,  26  Atl.  646;  Perine  Cont.  Co.  v.  Quackenbush,  104 
Cal.  684,  38  Pac.  533;  State  v.  Bd.  of  Commr's  Shawnee  County,  57  Kan.  267, 

45  Pac.  616;  Contra  Siegel  t>.  Chicago,  223  lU.  428,  79  N.  E.  280;  Fishburn  v. 
Chicago,  171  111.  338,  49  N.  E.  532;  Diamond  v.  Mankato,  89  Mmn.  48,  93 
N.  W.  911. 

*  Smith  V.  Syracuse  Imp.  Co.,  161  N.  Y.  484,  55  N.  E.  1077;  Kansas  City 
Hyd.  P.  B.  Co.  V.  Nat.  Surety  Co.,  157  Fed.  620;  Nat.  Surety  Co.  v.  Kansas 
City  Hyd.  P.  B.  Co.,  73  Kan.  196,  84  Pac.  1034;  Atkin  v.  Wyandotte  Coal  & 
L.  Co.,  73  Kan.  768,  84  Pac.  1040. 

205 


§  128  ]         CREATION  OF  THE  CONTRACT        [  PART  II 

in  several  ways.  In  some  jurisdictions,  if  the  owner  of  the 
patent  files  an  agreement  with  the  pubHc  to  furnish  the 
patented  supply  to  the  successful  bidder  at  a  stated  price, 
piu"chase  of  patented  articles  is  allowed.^ 

In  others,  the  right  to  provide  as  compensation  to  the 
patentee  a  royalty  reasonable  in  amount  for  the  use  of  his 
material  is  provided  as  a  term  of  the  specifications,  and  as 
long  as  the  patentee  cannot  hold  the  right  to  use  the 
process  so  as  to  designate  the  contractor,  there  is  no 
interference  with  the  statutory  competition  contemplated.^ 

But  in  these  jurisdictions,  the  doctrine  above  set  out 
that  competitive  statutes  can  have  no  application,  seems 
to  be  fully  sustained.  It  is  simply  because  the  public 
authorities  properly  charged  with  the  responsibility  of 
selection  of  durable  materials  and  supplies  have  hedged  in 
the  use  of  patented  articles  by  the  limitations  named  that 
these  decisions  have  arisen.  But  their  clear  purport  is  to 
the  effect  that  municipaUties  should  be  permitted  to  use 
patented  articles  either  by  direct  purchase  or  under  such 
conditions  as  the  public  bodies  themselves  may  fix  or  the 
legislature  may  establish  where  it  has  dealt  with  the  subject. 

Where  the  contract  is  for  a  service  continuous  in  its 
character  but  terminable  at  the  pleasure  of  the  public 
body,  the  mere  fact  that  it  may  be  continued  so  long  as  to 
cost  in  the  aggregate  more  than  the  amount  limited  by 

1  Ford  V.  Great  Falls,  46  Mont.  292,  127  Pac.  1004;  Saunders  v.  Iowa  City, 
134  Iowa,  132,  111  N.  W.  529;  McEwen  v.  Cceur  D'Alene,  23  Idaho,  746,  132 
Pac.  308;  Johns  v.  Pendleton,  66  Oreg.  182,  133  Pac.  817. 

"  Tousey  v.  Indianapolis,  175  Ind.  295,  94  N.  E.  225;  Reed  v.  Rackliffe  G.  C. 
Co.,  25  Okla.  633,  107  Pac.  168;  Warren  Bros.  v.  New  York,  190  N.  Y.  297, 
83  N.  E.  59;  Allen  v.  Milwaukee,  128  Wis.  678,  106  N.  W.  1099.  (These  are 
cases  where  statutes  regulating  the  matter  of  purchase  of  patented  articles  are 
directly  construed.  Some  text  writers  discuss  the  "Wisconsin  rule,"  but  there 
is  no  judicial  rule  but  a  statute  interpretation. 

(See  cases  cited,  ante,  notes  1  and  2,  where  all  of  these  courts  except  Indiana 
unanimously  agree  that  competitive  statutes  could  not  apply  to  patents.) 

206 


CHAP.  XIX  ]  LETTING   TO    LOWEST   BIDDER  [  §  129 

statute  for  contracts  let  without  competition,  will  not 
bring  it  within  the  statute.  The  statute  was  intended  to 
apply  to  contracts  for  particular  jobs  involving  hability  to 
pay  such  amount,  not  to  services  for  an  indefinite  period 
involving  no  obligation  to  continue  the  service.^  It  has 
no  application  to  contracts  for  personal  service,^  nor  to 
professional  services.^ 

But  bids  requiring  the  use  of  certain  kinds  of  material 
or  better  do  not  violate  the  provision  of  the  statute.^ 
In  some  jurisdictions  the  character  of  the  use  controls  the 
right  to  purchase  patented  supphes,  and  accordmgly  a  city 
acting  for  itseK  may  buy  and  make  use  of  patented 
articles  for  its  municipal  purpose,  but  not  where  it 
charges  the  property  of  individuals  to  pay  therefor  by 
assessment.^ 

§  129.  When  not  Required — Extra  Work — Substitution  of 
Materials. 

Statutes  regulating  the  award  of  contracts  to  the  lowest 
bidder  after  advertising  for  bids  do  not  prevent  the  pubhc 
body  from  inserting  in  a  contract  for  pubUc  work  a  pro- 
vision for  the  payment  of  extra  work  which  becomes 
necessary  as  the  general  work  progresses.^  Such  extra 
work  need  not  be  let  upon  separate  advertisement.^ 
Sometimes,  it  is  provided  by  statute  that  in  the  contract, 
a  clause  may  be  inserted  to  provide  for  additional  work  or 

1  Swift  V.  Mayor,  83  N.  Y.  528,  537. 

2  Smithmeyer  v.  U.  S.,  147  U.  S.  342,  37  L.  Ed.  196,  aff'g  25  Ct.  CI.  481. 

3  Smith  V.  Mayor,  5  Hun,  237;  People  ex  rel.  Smith  v.  Flagg,  17  N.  Y, 
584. 

« Oak  Park  v.  Gait,  231  111.  365,  83  N.  E.  209;  Muff  v.  Cameron,  134  Mo. 
App.  607,  114  S.  W.  1125,  117  S.  W.  116. 

6  Monaghan  v.  IndianapoUs,  37  Ind.  App.  280,  76  N.  E.  424;  Allen  v.  Mil- 
waukee, sujrra. 

6  Clark  &  Sons  Co.  v.  Pittsburg,  217  Pa.  St.  46,  66  Atl.  154. 

^  Idem. 

207 


§  129  ]         CREATION  OF  THE  CONTRACT       [  PART  H 

supplies  not  exceeding  a  stated  percentage  of  the  contract 
price/  or  exceeding  a  suni  provided  by  law.- 

But  contingencies  for  extra  work  must  be  provided  for 
beforehand  in  the  specifications  and  contract  in  order  to 
permit  payment  therefor  without  advertised  letting.  A 
contract  which  leaves  the  payment  for  extra  work  to  be 
agreed  upon  by  private  arrangement  or  agreement  between 
the  public  body  and  the  contractor  is  contrary  to  the 
express  provisions  of  these  statutes  and  is  void,  and  no 
recovery  can  be  had  either  upon  the  express  arrangement 
made  or  upon  an  imphed  obligation.  The  addition  of  an 
entirely  new  work  to  a  contract  already  awarded  is  for 
stronger  reasons  equally  to  be  condemned. ^  When  mate- 
rial provided  by  a  contract  let  under  the  statute  proves  to 
be  defective,  these  statutes  forbid  private  substitution 
between  the  public  officials  and  the  contractor  of  new 
material  or  of  a  new  form  of  construction  in  place  of  that 
provided  by  the  contract.^ 

Where  the  statute  providing  for  awarding  of  public 
contracts  to  the  lowest  bidder  is  limited  in  scope  and  does 
not  include  alterations  or  additions,  these  may  be  provided 
for  without  advertising.'"' 

§  130.  When  Bids  not  Required — Certificate  of  Head  of 
Department — Prior  Appropriation. 

Contracts  under  certain  stated  amounts  provided  by 
law  may  be  made  by  public  officials  without  competitive 
bidding.     Whatever  is  not  included  within  the  provisions 

1  Greater  N.  Y.  Charter,  §  419. 

2  Sadler  v.  Eureka  County,  15  Ncv.  39;  McBrien  v.  Grand  Rapids,  56  Mich. 
95,  22  N.  W.  206. 

3  Ely  V.  Grand  Rapids,  84  Mich.  336,  47  N.  W.  447. 
*  Cahn  V.  Metz,  115  N.  Y.  App.  Div.  516. 

5  E.scambia  County  v.  Blount  Cons.  Co.,  66  Fla.  129,  62  So.  650;  Pacific 
Brir'ge  Co.  v.  Clackamas  County,  45  Fed.  217. 

208 


CHAP.  XEX  ]  LETTING   TO   LOWEST  BIDDER  [  §  130 

of  these  statutes  may  be  let  privately  and  without  com- 
petition in  the  discretion  of  public  officials.^  In  some 
jurisdictions  the  contract  can  only  be  let  without  com- 
petition provided  the  head  of  department  has  certified  to 
the  necessity  of  the  work  and  the  money  for  the  expendi- 
ture has  been  appropriated.^ 

The  object  of  these  provisions  of  law  is  not  to  prohibit 
contracts,  but  to  prohibit  the  expenditure  of  money 
therefor,  unless  the  right  thereto  was  certified  and  unless 
the  fund  existed  from  which  payment  might  be  made.' 
A  contract  made  without  the  certificate  and  the  appropria- 
tion is  an  absolute  nullity,  and  no  recovery  can  be  had 
thereunder,'*  even  though  the  city  has  had  the  benefit  of 
the  work  done,^  or  the  supplies  furnished,^  and  a  mere 
verbal  order  will  not  suffice  or  take  the  place  of  the  formal 
certificate  required  by  the  statute.''  As  between  the 
contractor  and  the  city  this  certificate  of  the  proper  officer 
is  conclusive,  where  there  is  no  fraud  or  collusion,  and 
where  the  facts  indicate  that  the  necessity  certified  was  a 
possible  incident  of  the  work  to  be  done  or  the  supply  to 
be  furnished,^  and  even  when  signed  by  a  subordinate,  is 
presumed  to  be  authorized.^  Where  employment  is 
terminable  at  pleasure,  though  continuous  in  character, 
the  fact  that  it  might  be  continued  to  exceed  the  money 
limit  placed  upon  non-competitive  contracts  will  not  bring 

1  People  V.  Kane,  43  N.  Y.  App.  Div.  472,  aff'd  161  N.  Y.  380,  55  N.  E.  946. 

2  People  V.  Kane,  supra;  Greater  N.  Y.  Charter,  §§  149,  419;  Dady  v.  New 
York,  65  Misc.  382,  148  N.  Y.  App.  Div.  956. 

*  People  V.  Kane,  supra. 

*  Donovan  v.  New  York,  33  N.  Y.  291. 

^  Donovan  v.  New  York,  supra;  Walton  v.  Mayor,  26  N.  Y.  App.  Div.  76. 
« Keane  v.  New  York,  88  N.  Y.  App.  Div.  542. 

7  Dady  v.  New  York,  65  Misc.  382,  148  App.  Div.  956;  Walton  v.  Mayor,  26 
N.  Y.  App.  Div.  76;  Keane  v.  New  York,  supra. 

8  Brady  v.  New  York,  112  N.  Y.  480,  20  N.  E.  390. 

9  Gulp  V.  New  York,  146  N.  Y.  App.  Div.  326. 

209 


§  130  ]         CREATION  OF  THE  CONTRACT       [  PART  n 

it  within  the  terms  of  the  statute  requiring  competition.^ 
SuppUes  obtained  upon  distinct  orders  each  invohdng 
an  expenditure  of  less  than  the  money  Umit  for  non-com- 
petitive bids  but  in  the  aggregate  exceeding  such  amount 
can  only  be  validly  made  upon  public  letting  under  com- 
petitive bids.^ 

§  131.  When  Bids  not  Required. 

When  the  provisions  of  statutes  requiring  public  letting 
by  competitive  bidding  are  restricted  in  their  scope  to 
certain  classes  of  pubhc  contracts,  contracts  which  cover 
classes  of  work  other  than  those  described  are  under 
familiar  canons  of  construction  excluded  from  the  opera- 
tion of  the  statutes.^  Therefore,  statutes  which  provide 
for  competitive  bids  for  street  work  do  not  include  hghting 
of  streets.'*  The  lighting  contract  of  a  pubhc  body  will 
not  be  controlled  by  a  statute  requiring  competitive  bids 
for  pubhc  works.^  The  renting  of  rooms  is  not  included 
in  such  a  statute  affecting  work  or  supplies.^  Additions 
and  alt'Crations  do  not  come  within  the  terms  of  a  statute 
requiring  contracts  for  erecting  or  building  of  a  house.^ 

§  132.  The  Same — Emergency. 
The  provisions  of  such  statutes  do  not  apply  to  work 

1  Swift  V.  Mayor,  83  N.  Y.  528;  People  v.  Kane,  161  N.  Y.  380,  55  N.  E. 
946. 

2  Walton  V.  Mayor,  26  N.  Y.  App.  Div.  76.  (The  result  reached  in  this 
case  seems  to  be  in  conflict  with  the  doctrine  of  Swift  v.  Mayor,  supra,  and 
People  V.  Kane,  supra);  Gamewell  F.  A.  Tel.  Co.  v.  Los  Angeles,  187  Pac. 
(Cal.)  163. 

3  Davies  v.  New  York,  83  N.  Y.  207,  214;  Elec.  L.  &c.  Co.  v.  San  Bernardino, 
100  Cal.  348,  34  Pac.  819;  Escambia  County  v.  Blount  Cons.  Co.,  66  Fla.  129, 
62  So.  650;  Walsh  v.  Columbus,  36  Ohio  St.  169;  Atlantic  Gas  &  W.  Co.  v. 
Atlantic  City,  73  N.  J.  L.  360,  63  Atl.  997. 

*  Elec.  L.  &c.  Co.  V.  San  Bernardino,  supra. 
'  Atlantic  Gas  Co.  v.  Atlantic  City,  supra. 
"  Davies  v.  New  York,  supra. 
'  Escambia  County  v.  Blount  Cons.  Co.,  supra. 

210 


CHAP.  XEX  ]  LETTING   TO   LOWEST  BIDDER  [  §  132 

done  or  materials  furnished  to  meet  an  emergency  creating 
a  necessity  for  such  work  or  materials  which  must  be  met 
at  once.^  Contingencies  continuously  arise  in  the  adminis- 
tration of  public  affairs  when  services,  materials  and 
property  above  the  prescribed  Umit  for  non-competitive 
bids  are  immediately  needed  and  where  competitive  bids 
and  written  contracts  are  unserviceable  or  impossible.  The 
statutes  were  never  intended  to  apply  to  such  cases. 
Whenever,  therefore,  the  nature  of  the  service  or  of  the 
materials  or  property  needed  for  public  use,  or  the  time 
within  which  these  must  be  had  is  so  short  that  recourse 
to  competitive  bids  would  cause  irreparable  mischief,  the 
acts  cannot  apply.  Such  emergencies  were  not  amongst 
the  mischiefs  these  statutes  were  designed  to  correct.^ 
The  general  law  of  the  State  must  be  regarded  as  an  amend- 
ment of  or  at  least  a  part  of  all  municipal  charters.  When 
it  imposes  a  duty  on  a  public  officer  to  provide  services  or 
supplies,  or  a  place  in  which  to  render  the  services  or  use 
the  supplies,  for  those  whose  care  and  treatment  is  in- 
trusted to  and  charged  upon  certain  public  officers,  it 
becomes  the  duty  of  such  officers  to  comply  with  such 
general  law  whether  or  not  there  is  any  provision  in  the 
charter  to  raise  money  or  contract  debts  for  that  purpose.^ 
But  such  provisions  of  general  law  do  not  abrogate  the 
methods  of  procedure  required  by  municipal  charters  to 
make  contracts,  if  all  that  the  emergency  requires  can  be 

1  Harlem  G.  L.  Co.  v.  Mayor,  33  N.  Y.  309;  North  River  E.  L.  &  P.  Co.  v. 
New  York,  48  N.  Y.  App.  Div.  14;  Blank  v.  Kearny,  44  N.  Y.  App.  Div.  592; 
Dady  v.  New  York,  65  Misc.  382,  148  N.  Y.  App.  Div.  956;  Washburn  v. 
Shelby  County  Comm'rs,104  Ind.  321,  3  N.  E.  757;  U.  S.  v.  Speed,  8  WaU. 
(U.  S.)  77,  19  L.  Ed.  449,  aff'g  2  Ct.  CI.  429;  Stevens  v.  U.  S.,  2  Ct.  CI.  95; 
Reeside  v.  U.  S.,  2  Ct.  CI.  1. 

2  Harlem  G.  L.  Co.  v.  Mayor,  supra;  North  River  Elec.  L.  Co.  v.  New  York, 
supra;  Blank  v.  Kearney,  supra;  Matter  of  Plattsburgh,  157  N.  Y.  78,  51  N.  E. 
612;  Schneider  v.  U.  S.,  19  Ct.  CI.  547;  Child  v.  U.  S.,  4  Ct.  CI.  176. 

2  Matter  of  Plattsburgh,  supra. 

211 


§  132  ]         CREATION  OF  THE  CONTRACT       [  PART  II 

had  by  compliance  with  the  charter.^  It  was  never  in- 
tended, however,  that  public  officers  charged  with  a  posi- 
tive duty  should  wait  until  a  board  or  other  public  body 
be  called  together  to  make  an  order  or  an  appropria- 
tion before  they  would  respond  to  their  public  duty  and 
meet  some  critical  emergency.^  When  the  statute  in- 
cludes emergency  contracts,  a  contract  should  follow 
its  terms  in  order  to  be  valid.^ 

§  133.  Competitive  Bids— When  Bids  not  Required — 
M  onopoly — Patents . 

When  in  the  very  nature  of  things  competitive  bids  are 
impossible  from  the  fact  that  a  monoply  of  the  particular 
supply  exists  either  because  one  person  controls  the 
supply,^  or  has  been  granted  an  exclusive  franchise  ^  to 
sell  it,  or  it  results  from  a  patent  ^  and  the  patented 
article  can  only  be  had  from  one  person,  these  statutes 
relating  to  competitive  bidding  do  not  apply. 

Where  competition  is  impossible  in  these  circumstances, 
it  cannot  be  supposed  that  the  legislative  purpose  was  to 
compel  a  pubhc  body  to  go  through  the  useless  and 
farcical  form  of  a  letting  to  the  lowest  bidder. 

In  some  jurisdictions,  the  purchase  of  a  patented  article 
is  controlled  by  special  statute  which  must  be  followed.' 

'  Matter  of  Plattsburgh,  supra. 

2  Washburn  v.  Shelby  County  Comm'rs,  supra;  Clark  Co.  v.  Allegheny  City, 
143  Fed.  644. 

3  Newton  v.  Toledo,  8  Ohio  C.  Dec.  607. 

<  Dctwiller  v.  Mayor,  46  How.  Pr.  218;  Gleason  v.  Dalton,  28  N.  Y.  App. 
Div.  555. 

i  Harlem  Gas  Co.  v.  New  York,  33  N.  Y.  309;  Hartford  v.  Hartford  Elec. 
Co.,  Go  Conn.  324,  32  Atl.  925;  Purley  Water  Co.  v.  Vaughn,  115  Wis.  470, 
91  N.  W.  971. 

"Baird  v.  Mayor,  96  N.  Y.  567;  Re  Dugro,  50  N.  Y.  513;  Nicholson  v. 
Painter,  35  Cal.  699;  Kilvington  v.  Superior,  83  Wis.  222,  53  N.  W.  487. 

^  Warren  Bros.  v.  New  York,  190  N.  Y.  297,  83  N.  E.  59;  Allen  v.  MUwaukee, 
128  Wis.  678,  106  N.  W.  1099. 

212 


CHAP.  XIX  ]  LETTING   TO   LOWEST  BIDDER  [  §  135 

§  134.  Letting  of  Public  Contracts — Competitive  Bidding — 

When  Bids  not  Required — Scientific  Knowledge — 

Professional  Skill. 

When    the    services    to    be    rendered    require    scientific 

knowledge  and  professional  skill,  this  character  of  service 

need  not  be  obtained  through  competitive  bids.* 

§  135.  Opening  the  Bids. 

The  provisions  of  competitive  bidding  statutes  which 
require  that  all  bids  shall  be  publicly  opened  and  declared 
by  the  officer  advertising  for  bids  or  in  the  presence  of 
certain  officials  or  public  body  are  not  merely  permissive 
but  imperative  and  mandatory,  and  unless  complied  with 
will  destroy  the  validity  of  any  contract  based  upon  such 
proceedings.-  The  officer  appointed  by  law  to  perform 
this  duty  cannot  delegate  it  to  his  subordinate.^ 

A  delay  of  one  day  after  bids  were  received  for  which  an 
adjournment  was  taken  to  bring  the  officials  together  who 
were  charged  with  the  duty  of  opening  the  bids  will  not  af- 
fect acceptance  or  rejection.  The  purpose  of  the  statute  is 
that  the  bids  shall  be  examined  within  a  reasonable  time.'* 

Even  where  the  statute  provides  for  opening  of  bids  and 
that  the  public  officials  shall  then  ascertain  or  determine 
whose  is  the  most  favorable  proposal,  this  does  not 
restrict  them  to  an  instant  determination,  but  authorizes 
an  adjournment  for  that  purpose.^ 

1  People  ex  rel.  Smith  v.  Flagg,  5  Abb.  Pr.  232;  Peterson  v.  Mayor,  17  N.  Y. 
449;  Horgan  &  Slattery,  Inc.  v.  New  York,  114  N.  Y.  App.  Div.  555;  Harlem 
G.  L.  Co.  V.  Mayor,  33  N.  Y.  309;  Schieffelin  v.  New  York,  65  Misc.  609; 
Newport  News  v.  Potter,  122  Fed.  321. 

2  People  ex  rel.  Rodgers  v.  Coler,  35  N.  Y.  App.  Div.  401;  McCord  v.  Lauter- 
bach,  91  Id.  315;  Edwards  v.  Berlin,  123  Cal.  544,  56  Pac.  432. 

*  People  ex  rel.  Rodgers  v.  Coler,  supra. 

*  McCord  V.  Lauterbach,  supra. 

B  LiUenthal  v.  Yonkers,  6  N.  Y.  App.  Div.  138,  154  N.  Y.  766;  Tingue  v. 
Port  Chester,  101  N.  Y.  294. 

213 


§  135  1  CREATION   OF  THE   CONTRACT  [  PART  H 

If  the  minutes  of  the  board  or  body  do  not  show  that 
bids  were  opened  and  declared  this  is  prima  facie  proof 
that  the  statute  was  not  compUed  with,^  but  where  they 
do  a  contrary  presumption  arises.^ 

1  Edwards  v.  Berlin,  supra. 

2  City  Street  Imp.  Co.  v.  Laird,  138  Cal.  27,  70  Pac.  916. 


214 


CHAPTER  XX 

FORM  OF  CONTRACT — WRITTEN  CONTRACTS 

§  136.  Necessity  of  Written  Contracts — In  General. 

Public  contracts  need  not  necessarily  be  in  writing  to  be 
valid,  and  unless  a  statute  requires  it  the  contract  need  not 
be  in  writing.  Oral  public  contracts  are  valid  and  binding 
where  they  do  not  conflict  with  the  requirements  of  the 
Statute  of  Frauds,  and  these  will  be  satisfied  even  by  the 
minutes  of  the  pubhc  body  signed  by  its  clerk.  ^  Indeed  if 
the  offer  expressly  or  impliedly  permits  of  acceptance  in 
the  ordinary  way  of  commercial  transactions  by  letter  or 
telegram  duly  sent  to  the  proposer  before  the  offer  is  with- 
drawn, a  contract  becomes  effective  upon  the  mailing  or 
sending.  2  In  like  manner  where  a  proposal  follows  the  ad- 
vertisement in  competitive  bidding  its  acceptance  makes  a 
binding  contract  of  the  same  force  and  effect  as  if  a  formal 
contract  had  been  written  out  and  signed  by  the  parties.^ 

§  137.  The  Same — Federal  Statute. 

The  provisions  of  the  federal  statutes  admit  of  the  mak- 
ing of  a  valid  executory  contract  in  such  circumstances 
where  an  emergency  exists.'*    But  a  valid  executory  con- 

1  Argus  Co.  V.  Albany,  55  N.  Y.  495;  Peterson  v.  N.  Y.,  17  N.  Y.  449;  New 
Athens  v.  Thomas,  82  111.  259;  Athearn  v.  Ind.  Sch.  Dist.,  33  Iowa,  105;  Fitton 
V.  Hamilton  City,  6  Nev.  196;  Dunlap  v.  Water  Commr's,  151  Pa.  St.  477,  25 
Atl.  60;  Hardwick  v.  Wolcott,  78  Vt.  23,  61  Atl.  471. 

2  Burton  v.  U.  S.,  202  U.  S.  344,  385,  50  L.  Ed.  1057;  Haldane  v.  U.  S.,  69 
Fed.  819. 

'  U.  S.  V.  Purcell  Envelope  Co.,  249  U.  S.  313,  63  L.  Ed.  620;  Garfielde  v. 
U.  S.,  93  U.  S.  242,  23  L.  Ed.  779. 

^Sec.  3709,  U.  S.  Rev.  Stat.;  U.  S.  v.  Purcell  Env.  Co.,  249  U.  S.  313,  63 
L.  Ed.  620;  §  3744,  U.  S.  Rev.  Stat. 

215 


§  137  ]  CREATION   OF   THE   CONTRACT  [  PART  n 

tract  cannot  be  made  by  federal  authorities  under  these 
statutes,  which  are  mandatory.^  It  is  the  ultimate  formal 
instrument  which  the  statute  contemplates  shall  be  signed.^ 
But  a  vahd  contract  exists,  even  though  this  statute  has 
not  been  complied  with,  if  the  contract  is  executed. ^  Ad- 
vertisements, specifications,  proposals  and  letters  do  not 
constitute  the  contract  in  writing  which  is  required/  But 
although  the  parties  intend  a  final  written  contract  and 
conduct  the  preliminary  negotiations  through  correspond- 
ence and  definitely  agree  thereby  to  all  the  terms  of  such 
final  agreement,  one  of  the  parties  cannot  escape  or  evade 
his  obligation  by  refusing  to  sign  the  formal  contract  which 
the  parties  understood  was  to  be  subsequently  drawn  and 
executed.^  Preliminary  writings  or  memoranda  made  by  the 
parties  cannot  be  resorted  to  for  the  purpose  of  establishing 
the  formal  written  contract  which  the  statute  requires.^  The 
contract  must  be  in  writing  and  must  be  signed  by  the 
contracting  parties^  A  writing  is  not  essential  in  the  case 
of  all  government  contracts,  as  there  are  many  classes  of 
contracts  to  which  the  provisions  of  the  statutes  do  not 
apply.^ 

§  138.  The  Same — State  Statutes. 

On  the  other   hand,  the   State  courts   reach  a  different 

1  Clark  V.  U.  S.,  95  U.  S.  539,  541,  24  L.  Ed.  518;  Henderson  v.  U.  S.,  4  Ct. 
CI.  75;  McLaughlin  &  Co.  v.  U.  S.,  37  Ct.  CI.  150. 

2  Monroe  v.  U.  S.,  184  U.  S.  524,  46  L.  Ed.  670,  aff'g  35  Ct.  CI.  199. 

3  St.  Louis  Hay  &  Grain  Co.  v.  U.  S.,  191  U.  S.  159,  48  L.  Ed.  130,  aff'g  37 
Ct  CI.  281;  U.  S.  V.  R.  P.  Andrews  &  Co.,  207  U.  S.  229,  52  L.  Ed.  185,  aff'g 
41  Ct.  CI.  48;  U.  S.  v.  N.  Y.  &  P.  R.  S.  S.  Co.,  239  U.  S.  88,  60  L.  Ed.  161. 

*  McLaughlin  &  Co.  v.  U.  S.,  36  Ct.  CI.  138;  South  Boston  Iron  Co.  v. 
U.  S.,  118  U.  S.  37,  30  L.  Ed.  69,  aff'g  18  Ct.  CI.  165. 

6  U.  S.  V.  P.  J.  Carlin  Cons.  Co.,  224  Fed.  589. 

«  South  Boston  Iron  Co.  v.  U.  S.,  supra. 

'  South  Boston  Iron  Co.  v.  U.  S.,  supra;  Clark  v.  U.  S.,  supra;  U.  S.  v.  La- 
mont,  2  App.  D.  C.  532. 

8  Sees.  3744,  3747,  U.  S.  Rev.  Stat.;  Carlin  Cons.  Co.  v.  U.  S.,  224  Fed.  859. 

216 


CHAP.  XX  ]  FORM  OF  CONTRACT  [  §  138 

conclusion  with  reference  to  the  necessity  for  written  con- 
tracts and  generally  hold  with  respect  to  these  provisions 
of  law  which  require  contracts  to  be  in  writing  that  they 
are  mandatory,  cannot  be  waived  and  are  in  most  instances 
in  the  nature  of  conditions  precedent  to  the  exercise  by 
public  bodies  of  the  power  to  contract.  They  therefore 
hold  these  provisions  of  law  applicable  alike  to  contracts 
executed  as  well  as  executory.  Accordingly  since  the 
manner  of  making  public  contracts  is  thus  limited,  where 
it  is  not  followed  the  contract  attempted  to  be  made  is 
illegal  and  no  recovery  may  be  had  thereon  even  though 
there  has  been  full  performance  and  the  public  body  has 
received  and  retained  the  benefits.^  Nor  will  recovery  of 
reasonable  value  be  permitted.  ^  This  latter  view  does  not 
prevail  universally  and  there  are  many  jurisdictions  wherein 
recovery  of  reasonable  value  is  allowed.^  It  is  contended 
that  while  a  contract  is  executory  it  might  be  demanded  that 
it  be  executed  according  to  legal  requirements  but  that  no 
such  objection  should  be  entertained  or  sustained  after  it 
has  been  executed,  since  the  rule  of  ordinary  honesty  and 
morality  is  applied  as  strongly  to  public  bodies  as  to  individ- 
uals.'' Implied  liability  is  raised  because  of  the  receipt  of 
money  or  property  and  the  failure  to  return  it  or  make 
compensation,   and  is  founded  in  the   general   obligation 

1  Murphy  v.  Louisville,  9  Bush  (Ky.),  189;  Boston  Elec.  Co.  v.  Cambridge, 
163  Mass.  64,  39  N.  E.  787;  McBrian  v.  Grand  Rapids,  56  Mich.  95,  22  N.  W. 
206;  Schumm  v.  Seymour,  24  N.  J.  Eq.  143;  McDonald  v.  Mayor,  68  N.  Y. 
23;  Dickinson  v.  Poushkeepsie,  75  N.  Y.  65;  Smart  v.  Philadelphia,  205  Pa. 
St.  329,  54  Atl.  1025;  McManus  v.  Phila.,  201  Pa.  St.  619,  51  Atl.  322;  Watter- 
son  V.  Mayor  of  Nashville,  106  Tenn.  410,  61  S.  W.  782;  Starkey  v.  Minneapolis, 
19  Minn.  203;  Arnott  v.  Spokane,  6  Wash.  442,  33  Pac.  1063. 

2  Idem. 

*  Cincinnati  v.  Cameron,  33  Ohio  St.  336;  Baxter  Sprmgs  v.  Baxter  Springs 
L.  &  P.  Co.,  64  Kan.  591,  68  Pac.  63;  Beers  v.  Dalles  City,  16  Oreg.  334,  18 
Pac.  835;  Memphis  G.  L.  Co.  v.  Memphis,  93  Tenn.  612,  30  S.  W.  25;  Jungdorf 
V.  Little  Rice,  156  Wis.  466,  145  N.  W.  1092. 

*  Baxter  Springs  v.  Baxter  Springs  L.  &  P.  Co.,  supra. 

217 


§  138]  CREATION   OF   THE   CONTRACT  [  PART  n 

to  do  justice  which  apphes  to   pubhc  bodies  as  well  as 
individuals.^ 

If  the  execution  of  a  written  contract  is  provided  for,  in 
terms,  in  the  charter  of  a  public  corporation,  but  a  written 
contract  is  not  executed,  yet  the  materials  and  work  pro- 
vided for  are  furnished  and  used,  the  neglect  to  execute  a 
written  contract  will  not  prevent  recovery  of  the  reasonable 
value  of  whatever  is  furnished. ^ 

§  139.  Oral  Modification  of  a  Contract  Required  by  Law 
to  be  in  Writing. 

"WTiere  the  statute  requires  that  all  contracts  relating  to 
the  public  affairs  shall  be  in  writing,  signed  and  executed  in 
the  name  of  the  public  body,  the  power  to  change  or 
modify  such  public  contracts  is  controlled  and  limited  and 
the  power  must  be  exercised  in  the  manner  pointed  out 
by  law.^  An  oral  modification  is  invalid  and  ineffectual, 
as  such  provision  is  mandatory  and  cannot  be  waived  or 
disregarded.^  Where  under  the  requirements  of  similar 
statutes  provision  is  made  for  the  modification  and  change 
of  the  contract  in  writing,  such  a  provision  may  be  waived.^ 

§  140.  Opening  of  Bids  and  Adoption  of  Resolution  of 
Award — Whether   Effective    to    Make    Contract 
Where  Writing  Required. 
Where  these  competitive  bidding  statutes  require  a  con- 
tract in  writing,  the  opening  of  the  proposals  or  bids  and 
the  adoption  of  a  resolution  of  award  do  not  complete  the 

1  Memphis  G.  L.  Co.  v.  Memphis,  supra. 

2  Central  Bituhthic  Pav.  Co.  v.  Vil.  of  Highland  Park,  164  Mich.  223,  129 
N.  W.  46;  Carey  v.  East  Saginaw,  79  Mich.  43,  44  N.  W.  168.  See  Ft.  Madison 
V.  Moore,  109  Iowa,  476,  80  N.  W.  527. 

»  McManus  v.  Phila.,  201  Pa.  St.  619,  51  Atl.  322. 

*  McManus  v.  Phila.,  supra. 

5  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312. 

218 


CHAP.  XX  ]         FORM  OF  CONTRACT  [  §  142 

contract.^  And  where  parties,  although  agreed  on  the 
terms,  intend  that  they  shall  be  reduced  to  writing  before 
the  bargain  shall  be  considered  complete,  neither  party  is 
bound  until  that  is  done  so  long  as  the  contract  remains 
without  any  acts  done  under  it  on  either  side.^ 

§  141.  Contract  Signed  by  Only  One  Party. 

If  a  contract  is  prepared  in  writing  and  presented  to  a 
contractor  already  signed  by  the  officials  of  the  public 
body  and  he  expresses  his  willingness  to  sign  it,  but  before 
he  is  permitted  to  sign  a  public  official  takes  it  away,  the 
minds  of  the  contracting  parties  then  meet  upon  the  terms 
embraced  in  the  writing  and  the  contract  is  complete. 
When  the  contractor  is  directed  to  proceed  with  the  work 
and  he  completes  it,  he  is  entitled  to  recover  the  compen- 
sation provided;  or  if  there  be  none,  its  value.  The  writing 
is  simply  evidence  of  a  contract.  The  contract  consists  of 
the  actual  agreement  between  the  parties.  If  a  contract  is 
reduced  to  writing  and  signed  by  one  of  the  parties  and 
accepted  and  acted  upon  by  the  other  it  will  bind  as  if 
signed  by  both  of  the  parties.' 

§  142.  Kind  of  Contract  which  Contractor  Must  Sign — 
Power  of  Public  Body  to  Make  Contract  which 
Differs  from  Advertisement. 
Where  a  contractor  for  public  work  bids  upon  certain 
plans,  specifications  and  conditions  set  out  or  referred  to 
in  the  notice  or  advertisement  for  bids  he  cannot  be  re- 
quired to  sign  and  execute  a  different  form  of  contract 

1  Hepburn  v.  Phila.,  149  Pa.  St.  335,  24  Atl.  279;  Smart  v.  Philadelphia,  205 
Pa.  St.  329,  54  Atl.  1025;  Contra,  Ft.  Madison  v.  Moore,  109  Iowa,  476,  80 
N.  W.  527;  Pennell  v.  Mayor,  17  N.  Y.  App.  Div.  455. 

2  Jersey  City  W.  Comm,  v.  Brown,  32  N.  J.  L.  504. 

»  Stivers  v.  Cherry  vale,  86  Kan.  270,  120  Pac.  361;  Hudson  v.  State,  14  Ga. 
App.  490,  81  S.  E.  362. 

219 


§  142  ]  CREATION   OF   THE   CONTRACT  [  PART  II 

than  such  as  reasonably  conforms  to  and  keeps  ahve  the 
substance  of  these  plans,  specifications,  conditions  of  work 
and  of  payment  and  other  conditions  described.  These 
terms  and  conditions  cannot  be  varied  to  the  hurt  of  the 
contractor  or  to  his  advantage  and  benefit.^  Where  the 
contract  offered  for  signature  contains  substantial  provi- 
sions beneficial  to  the  contractor  or  detrimental  to  him 
which  were  not  included  in  or  contemplated  by  the  terms 
and  specifications  upon  which  bids  were  invited,  such  con- 
tract is  invalid  as  in  violation  of  the  provisions  of  law  con- 
trolling competitive  bidding.  ^  The  contract  to  be  signed 
must  be  the  contract  which  was  offered  in  the  advertise- 
ment.^ The  pubUc  body  has  no  power  to  make  material  or 
substantial  changes  in  the  contract,  after  bids  are  opened, 
and  award  it  as  modified.^  It  would  be  destructive  of  all 
healthy  competition  and  of  the  purposes  of  competitive 
bidding,  if  one  of  the  competitors  could  be  permitted  after 
the  bids  were  opened  to  alter  his  bid  in  such  manner  as  to 
make  it  appear  below  others,  and  then  make  a  contract  at 
higher  prices,  with  a  large  number  of  such  prices  not  in 

1  Cotter  V.  Casteel,  37  S.  W.  (Tex.)  791;  Diamond  v.  Mankato,  89  Minn.  48, 
93  N.  W.  911. 

2  Cotter  V.  Casteel,  supra;  Diamond  v.  Mankato,  supra;  Dickinson  v.  Pough- 
keepsie,  75  N.  Y.  65;  Van  Reipen  v.  Jersey  City,  58  N.  J.  L.  262,  33  Atl.  740; 
McDermott  v.  Street  &  W.  Coram.  Jersey  City,  56  N.  J.  L.  273,  28  Atl.  424; 
Shaw  V.  Trenton,  49  N.  J.  L.  339,  12  Atl.  902;  Osbom  v.  Lyons,  104  Iowa,  160, 
73  N.  W.  650;  Wells  v.  Raymond,  201  111.  435,  66  N.  E.  210;  Inge  v.  Bd.  of 
Public  Works,  135  Ala.  187,  33  So.  678. 

2  Diamond  v.  Mankato,  89  Minn.  48,  93  N.  W.  911;  Nash  v.  St.  Paul,  11 
Minn.  174;  Schiffman  v.  St.  Paul,  88  Minn.  43,  92  N.  W.  503;  Wickwire  v. 
Elkhart,  144  Ind.  305,  43  N.  E.  216;  Dickinson  v.  Poughkeepsie,  75  N.  Y.  65. 

*  Inge  V.  Bd.  of  Public  Works,  supra;  Wickwire  v.  Elkhart,  supra;  Le  Tour- 
neau  v.  Hugo,  90  Minn.  420,  97  N.  W.  115;  Fairbanks  v.  North  Bend,  68  Neb. 
560,  94  N.  W.  537;  Dickinson  v.  Poughkeepsie,  supra;  Addis  v.  Pittsburgh,  85 
Pa.  St.  379;  Moran  v.  Thompson,  20  Wash.  525,  56  Pac.  29;  Chippewa  B.  Co. 
V.  Durand,  122  Wis.  85,  99  N.  W.  603;  American  Lighting  Co.  v.  McCuen,  92 
Md.  703,  48  Atl.  352;  McBrian  v.  Grand  Rapids,  56  Mich.  95,  22  N.  W.  206; 
Goshert  v.  Seattle,  57  Wash.  645,  107  Pac.  860;  State  ex  rel.  v.  Toole,  26  Mont. 
22,  66  Pac.  496. 

220 


CHAP.  XX  ]         FORM  OF  CONTRACT  [  §  142 

competition  at  all,  and  have  inserted  therein  clauses  for  his 
advantage,  in  no  manner  considered  by  the  other  bidders 
or  offered  to  them.^  Nor  may  a  public  officer  enter  into 
private  negotiations  with  a  contracting  firm  for  the  purpose 
of  reducing  its  original  bid  submitted  at  the  time  of  open 
competition. 2  But  this  rule  does  not  prohibit  all  variations 
from  the  specifications.  It  very  properly  allows  a  reasonable 
degree  of  latitude  in  the  details  involved  in  the  execution  of 
powers  conferred  by  fundamental  law  which  is  essential  to 
an  intelligent  and  practical  administration  of  public  affairs. 
Certainly  it  could  not  be  extended  so  far  as  to  avoid  an 
executed  contract  because  of  the  use  of  words  in  the  con- 
tract not  found  in  the  specifications,  or  for  any  mere 
irregularity  not  involving  substantial  rights.^ 

'  Dickinson  v.  Poughkeepsie,  supra. 

^Louchheim  v.  Philadelphia,  218  Pa.  100,  66  Atl.  1121.     (But  there  is  a 
■dictum  to  the  contrary  in  Dickinson  v.  Poughkeepsie,  supra.) 
»  Mankato  v.  Barber  A.  P.  Co.,  142  Fed.  329,  345. 


221 


CHAPTER  XXI 

MAKING  THE  AWARD 

§  143.  Awarding  Contract — Acceptance  of  Bids. 

The  receipt  of  bids,  the  opening  and  ascertaining  of  the 
lowest  one  and  the  announcement  of  the  fact  by  the  pubHc 
bodies  will  not  constitute  an  award  either  in  fact  or  in  law. 
The  competitor  who  is  lowest  bidder  acquires  no  rights 
from  any  or  all  of  these  facts  to  have  a  contract  executed 
with  him.  The  question  of  the  acceptance  of  the  bid, 
which  is  an  offer,  is  a  matter  of  discretion  which  they  can 
exercise  or  not  so  long  as  they  act  in  good  faith. ^  The 
public  body  may  reject  all  the  bids  and  readvertise  the 
work  if  in  its  judgment  and  discretion  such  course  is  for 
the  best  interests  of  the  public.  The  whole  matter  of 
examining  proposals  and  making  awards  is  judicial  in  its 
nature.-  If  statutes  do  not  interpose  a  barrier  the  public 
body  may  even  make  the  award  to  one  who  is  not  the 
lowest  bidder  amongst  those  bidding.^  Until  an  award  is 
actually  made  there  is  no  contract.^  Where  a  binding  con- 
tract can  only  be  made  in  writing  even  after  the  award, 

1  WUUams  v.  New  York,  118  App.  Div.  756,  192  N.  Y.  541,  84  N.  E.  1123; 
New  York  v.  Union  News  Co.,  222  N.  Y.  263,  118  N.  E.  635. 

2  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101. 

3  Riehl  V.  San  Jose,  101  Cal.  442,  35  Pac.  1013;  Kundinger  v.  Saginaw,  132 
Mich.  395,  93  N.  W.  914;  Elliott  v.  Minneapolis,  59  Minn.  Ill,  60  N.  W.  1081; 
Warren  v.  Barber  A.  P.  Co.,  115  Mo.  572,  22  S.  W.  490;  Walter  v.  McClellan, 
113  N.  Y.  App.  Div.  295,  190  N.  Y.  505,  83  N.  E.  1133;  Terrell  v.  Strong,  14 
Misc.  2.58;  Schefbauer  v.  Bd.  of  Kearney  Tp.,  57  N.  J.  L.  588,  31  Atl.  454; 
Oakley  v.  Atlantic  City,  63  N.  J.  L.  127,  44  Atl.  651;  Ryan  v.  Paterson,  66 
N.  J.  L.  533,  49  Atl.  .587;  North  Yakima  v.  Scudder,  41  Wash.  15,  82  Pac.  1022; 
Waco  V.  Chamberlain,  92  Tex.  207,  47  S.  W.  527. 

<  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101;  Anderson  v.  Bd.  &c.  St. 
Louis  P.  S.,  122  Mo.  61,  27  S.  W.  610. 

222 


€HAP.  XXI  ]  MAKING    THE    AWARD  [  §  143 

there  is  no  contract  until  the  writing  is  signed  and  executed, 
and  no  claim  or  responsibility  enforceable  against  the  pub- 
lic body.^  If  the  offer  and  acceptance  as  shown  by  the 
minutes  of  the  public  body  are  not  intended  to  constitute 
a  contract  until  a  formal  writing  is  signed,  the  acceptance 
is  not  complete  and  the  contract  will  not  bind  until  such 
written  instrument  is  executed.^  So  where  by  law  no  con- 
tract exists  except  where  the  contract  is  signed  by  a  named 
public  official,  until  he  signs  the  acceptance  is  incomplete.^ 
If  the  satisfactory  testing  of  a  machine  purchased  is  made 
the  basis  of  an  offer  there  must  be  further  action  before 
the  contract  will  be  complete.^  The  minds  of  the  parties 
must  of  course  meet  and  the  contract  they  meet  upon  must 
not  be  such  a  one  as  is  invahd  because  of  the  fail- 
ure to  perform  some  condition  precedent  to  the  exercise 
of  the  power  to  contract,  such  as  the  making  of  a  prior  ap- 
propriation.^ Acceptance  or  even  performance  cannot  make 
such  a  contract  vahd.^  So  a  conditional  award  may  not  be 
made  depending  upon  the  making  of  an  appropriation  by  some 
other  board  or  body.^  But  when  an  award  has  once  been 
made  the  public  body  have  no  discretion  to  refuse  to  exe- 
cute the  contract.  The  rights  of  the  parties  then  become 
fixed,  and  the  power  to  cancel  the  award  or  reject  the  bids 
does  not  exist.  The  obligation  of  the  contract  made  can- 
not thus  be  impaired  at  the  option  of  one  of  the  contract- 
ing parties.    After  a  public  body  notifies  a  bidder  that  his 

1  Smart  v.  Philadelphia,  205  Pa.  St.  329,  54  Atl.  1025. 

2  Santa  Rosa  Lighting  Co.  v.  Woodward,  119  Cal.  30,  50  Pac.  1025. 

3  Press  Pub.  Co.  v.  Pittsburgh,  207  Pa.  St.  623,  57  Atl.  75. 

4  Fleming  Mfg.  Co.  v.  Frankhn,  103  N.  W.  (Iowa)  997. 

5  Hinkle  v.  PhUadelphia,  214  Pa.  St.  126,  63  Atl.  590;  Rieser  Co.,  Inc.  v. 
New  York,  84  Misc.  69;  Williams  v.  New  York,  118  N.  Y.  App.  Div.  756,  192 
N.  Y.  541,  84  N.  E.  1123. 

8  Wadsworth  v.  Bd.  of  Superv's,  217  N.  Y.  484,  490,  112  N.  E.  161;  Hart 
V.  New  York,  201  N.  Y.  45,  55,  94  N.  E.  219. 

7  WiUiams  v.  New  York,  118  App.  Div.  756,  192  N.  Y.  541,  84  N.  E.  1123. 

223 


§  143  ]  CREATION   OF  THE    CONTRACT  [  PART  II 

bid  is  the  lowest  and  has  been  accepted  and  that  a  con- 
tract will  be  executed  with  him,  it  owes  him  the  legal  duty 
to  execute  the  contract,  and  if  it  refuses  to  perform  such 
duty  the  successful  bidder  may  recover  his  damages.^ 
The  attempt  by  the  head  of  department  to  reject  all  bids 
and  rescind  a  contract  after  it  has  been  awarded,  because 
the  financial  head  of  the  city  has  not  certified  that  there 
is  an  appropriation  available  and  apphcable  to  the  contract 
is  of  no  avail,  if  in  fact  the  fund  exists  and  certification  was 
not  had  merely  because  the  contract  was  not  presented. ^ 
And  where  the  public  body  after  it  has  given  notice  of 
an  award  attempts  to  reject  all  bids  and  readvertise,  the 
successful  bidder,  by  accepting  a  return  of  his  deposit,  does 
not  waive  his  right  to  insist  upon  performance  of  the  obli- 
gation which  the  public  body  incurred  by  notice  of  award.^ 
The  acceptance  of  the  offer  contained  in  the  advertising 
for  bids  must  be  unconditional.  If  it  be,  upon  condition 
that  a  bond  be  given  there  can  be  no  mutual  assent  of  the 
parties  and  no  binding  contract  until  that  condition  is 
satisfied.^ 

§  144.  The  Same — Acceptance — Where  Contract  is  Made 
by  Ordinance. 

A  public  contract  made  by  ordinance  or  resolution  of  the 
governing  body  of  a  municipality  is  complete  upon  accept- 
ance and  binds  both  parties.^ 

» Lynch  v.  New  York,  2  N.  Y.  App.  Div.  213;  Pennell  v.  New  York,  17 
Id.  455;  Beckwith  v.  New  York,  121  N.  Y.  App.  Div.  462;  Safety  Insulated 
W.  &  C.  Co.  V.  Baltimore,  66  Fed.  140. 

2  Beckwith  v.  New  York,  supra. 

'  Lynch  v.  New  York,  supra. 

*  Howard  v.  Maine  Industrial  School,  78  Me.  230,  3  Atl.  657. 

'  Curtis  V.  Portsmouth,  67  N.  H.  506,  39  Atl.  439;  Hunneman  v.  Grafton, 
10  Mete.  (Mass.)  454;  Indianapolis  v.  Indianapolis  G.  Co.,  66  Ind.  396;  Argus 
Co.  V.  Albany,  55  N.  Y.  495;  People  v.  San  Francisco,  27  Cal.  655. 

224 


CHAP.  XXI  ]  MAKING   THE   AWARD  [  §  145 

§  145.  The  Same — Approval  by  Officials. 

In  some  instances  it  is  essential  where  a  contract  is 
entered  into  by  one  official  that  there  shall  be,  before 
the  contract  can  be  effective,  an  approval  by  some  other 
official.  This  may  take  the  form  of  a  certification  by  the 
financial  head  that  there  is  a  fund  in  existence,  or  an 
approval  by  the  corporation  counsel  of  the  contract  as  to 
form.^  Where  a  statute  provides  that  no  contract  there- 
after made  shall  be  binding  or  of  any  force  unless  the 
comptroller  shall  indorse  thereon  his  certificate  that  there 
remains  unexpended  and  unapphed,  a  balance  of  the  ap- 
propriation or  fund  apph  cable  thereto  sufficient  to  pay 
the  estimated  expense  of  executing  such  contract  as  certi- 
fied by  the  officer  making  the  same,  these  provisions  do  not 
permit  a  head  of  department  to  rescind  the  contract  in  a 
case  where  the  certificate  was  not  made,  because  he  never 
presented  the  contract  to  the  comptroller  for  his  signature 
and  attempted  to  reject  all  bids  after  awarding  the  con- 
tract,^ as  long  as  such  fund  in  fact  existed.^  The  failure  to 
obtain  such  an  approval  would  be  fatal  to  any  contract  in- 
tended to  be  carried  out.  Such  language  admits  of  no 
escape  from  this  conclusion;  but  the  true  reason  under- 
lying the  result  reached  was  because  the  official  by  reject- 
ing all  bids  put  beyond  his  power  every  further  step  pro- 
vided by  law  to  be  taken,  and  the  rights  of  the  parties 
then  became  fixed  and  gave  a  right  of  recovery.^ 
Where  a  statute  expressly  requires  the  approval  by  a  su- 
perior officer  when  the  contract  is  entered  into  by  a  sub- 
ordinate officer,   without  such  approval  a  contract    can- 

1  Sec.  149,  Greater  N.  Y.  Charter. 

2  Beckwith  v.  New  York,  121  N.  Y.  App.  Div.  462. 
'  Beckwith  v.  New  York,  supra. 

*  Beckwith  v.  New  York,  supra,  and  cases  cited. 

225 


§  145  ]  CREATION   OF  THE    CONTRACT  [  PART  II 

not  become  binding  and  effective.^  If  in  the  meantime 
pending  approval  a  contractor  undertakes  the  work  and 
the  work  is  subsequently  stopped  he  cannot  recover  the 
loss  of  profits  for  the  suspension,-  or  if  he  does  the  work 
and  the  approval  is  not  given  he  may  have  no  recovery.^ 
There  is  authority,  however,  that  approval  may  exist  by 
implication  or  acquiescence.^ 

§  146.  The  Same — Necessity  of  Prior  Appropriation. 

The  requirement  in  a  statute  that  an  appropriation  must 
exist  before  public  bodies  shall  make  a  contract  is  manda- 
tory and  a  contract  entered  into  without  such  appropria- 
tion is  void  and  admits  of  no  recovery.^  No  implied  con- 
tract can  be  sustained  in  the  face  of  the  express  and  imper- 
ative provisions  of  such  statutes.^  If  in  fact  an  appropria- 
tion or  fund  existed  at  the  time  the  contract  was  made, 
the  fact  that  the  fund  was  subsequently  exhausted  will  not 

1  Monroe  v.  U.  S.,  184  U.  S.  524;  Johnston  v.  Philadelphia,  113  Fed.  40; 
Cathel  V.  U.  S.,  46  Ct.  CI.  368;  Little  Falls  Knitting  Mills  Co.  v.  U.  S.,  44  Ct. 
CI.  1;  Thompson  v.  U.  S.,  9  Ct.  CI.  187;  U.  S.  R.  S.,  §  3744,  Comp.  Stat.  §  6895. 

2  Darragh  v.  U.  S.,  33  Ct.  CI.  377. 
»  Monroe  v.  U.  S.,  sujrra. 

*  Wilder  v.  U.  S.,  5  Ct.  CI.  468;  Ford  v.  U.  S.,  17  Ct.  CI.  60;  Reeside  v.  U.  S., 
2  Ct.  CI.  1,  8.  c.  7  Ct.  CI.  82. 

5  Hilliard  v.  Bunker,  68  Ark.  340,  58  S.  W.  362;  Toomey  v.  Bridgeport,  79 
Conn.  229,  64  Atl.  215;  May  v.  Chicago,  222  111.  595,  78  N.  E.  912;  May  v. 
Gloucester,  174  Mass.  583,  55  N.  E.  465;  Green  v.  Everett,  179  Mass.  147, 
60  N.  E.  490;  Bd.  of  Water  Commr's  v.  Commr's,  146  Mich.  459,  85  N.  W. 
1132;  WilUams  v.  New  York,  118  N.  Y.  App.  Div.  756,  192  N.  Y.  541,  84  N.  E. 
1123;  Dady  v.  New  York,  65  Misc.  382,  148  N.  Y.  App.  Div.  956;  Roberts  v. 
Fargo,  10  N.  D.  230,  86  N.  W.  726;  Clark  v.  Portsmouth,  68  N.  H.  263,  44 
Atl.  388;  Kearney  v.  Downing,  59  Neb.  549,  81  N.  W.  509;  Pryor  v.  Kansas 
City,  153  Mo.  135,  54  S.  W.  499;  Tcnnant  v.  Crocker,  85  Mich.  328,  48  N.  W. 
577";  Findlay  v.  Pendleton,  62  Ohio  St.  80,  56  N.  E.  649;  Hinkle  v.  Philadelphia, 
214  Pa.  St.  26,  63  Atl.  590;  Indianapolis  v.  Wann,  144  Ind.  175,  42  N.  E.  901; 
McXeal  v.  Waco,  89  Tex.  83,  33  S.  W.  322;  Bradley  v.  U.  S.,  98  U.  S.  104,  25 
L.  Ed.  105,  aff'g  13  Ct.  CI.  166;  Hooe  v.  U.  S.,  218  U.  S.  322,  54  L.  Ed.  1055, 
aff'g  43  Ct.  CI.  245. 

«  Hooe  V.  U.  S.,  supra;  U.  S.  v.  McDougaU,  121  U.  S.  89,  30  L.  Ed.  861,  aff'g 
21  Ct.  CI.  511. 

226 


CHAP.  XXI  ]  MAKING   THE   AWAKD  [  §  146 

defeat  a  recovery,^  as  a  contractor  cannot  be  bound  to 
know  at  his  peril  the  state  of  the  treasury  as  to  its  gen- 
eral appropriations  or  whether  there  is  or  will  be  on  hand 
a  balance  to  pay  him.-  A  contractor  has  the  right  to  rely 
upon  the  presumption  that  the  head  of  a  department  is 
acting  within  the  prescribed  limits  of  his  authority.^  But 
if  the  appropriation  is  made  for  a  single  specific  purpose 
or  work  the  contractor  is  bound  to  know  the  amount  and 
keep  within  it  as  he  will  not  be  permitted  a  recovery  be- 
yond it.^  If  a  contract  obhgation  exceeds  the  constitutional 
debt  limit  no  recovery  can  be  had  against  the  public 
body  for  the  breach  of  such  a  contract.^  When  the  statute 
or  act  which  authorizes  the  work  places  no  hmit  on  the 
amount  to  be  expended  and  the  cost  of  the  contract  and  ex- 
tra work  exceeds  the  appropriation,  a  recovery  may  be  had.^ 
An  award  of  a  contract  conditioned  upon  some  other 
board  or  body  making  an  appropriation  or  an  additional 
appropriation  is  invaUd.  The  appropriation  must  precede 
the  contract  in  point  of  existence.^  So  when  an  appropria- 
tion for  only  part  of  the  cost  of  a  contract  exists,  an  agree- 
ment to  enter  into  a  contract  to  complete  the  work,  when 
requested  to  do  so,  on  condition  that  a  further  appropria- 
tion be   made,  is  void.^    Where  Umitations  on  amount  of 

1  Chicago  V.  Berger,  100  lU.  App.  158;  Dougherty  v.  V.  S.,  18  Ct.  CI.  496; 
Leavitt  v.  U.  S.,  34  Fed.  623;  Van  Dolsen  v.  Board  of  Education,  162  N.  Y. 
446,  56  N.  E.  990. 

2  Dougherty  v.  U.  S.,  18  Ct.  CI.  496.  See  Louisville  v.  Gosnel,  61  S.  W. 
(Ky.)  476. 

'  Leavitt  v.  U.  S.,  34  Fed.  623. 

« Curtis  V.  U.  S.,  2  Ct.  CI.  144,  152;  Trenton  Co.  v.  U.  S.,  12  Ct.  CI.  147; 
Dougherty  v.  U.  S.,  18  Ct.  CI.  496;  O'Brien  v.  Mayor,  139  N.  Y.  543,  35  N.  E. 
323. 

6  Dhrew  v.  Altoona,  121  Pa.  St.  401,  15  Atl.  636. 

6  Grant  v.  U.  S.,  5  Ct.  CI.  71. 

7  Williams  v.  New  York,  118  N.  Y.  App.  Div.  756,  192  N.  Y.  541,  84  N.  E. 
1123;  Johnston  v.  Philadelphia,  113  Fed.  40. 

*  Johnston  v.  Philadelphia,  supra. 

227 


§  146]  CREATION   OF   THE    CONTRACT  [  PART  II 

expenditure  exist  to  the  efifect  that  beyond  a  certain 
amount,  contracts  may  not  be  made  unless  in  writing  and 
after  advertisement  for  proposals,  or  that  they  must  be 
authorized  by  the  council  or  by  a  majority  vote  of  the 
electors  resident  in  the  municipality,  the  pubUc  body,  board 
or  officials  who  have  the  contract  in  charge  may  not  render 
their  acts  valid  and  defeat  the  purpose  of  the  statute  by 
dividing  the  contract  price  into  several  parts  through 
repeated  purchases.  The  Umits  of  authority  may  not  be 
avoided  by  splitting  up  the  time  of  the  use  of  goods  or 
things  or  the  amounts  or  numbers  of  purchases.^  But 
recovery  may  be  had  for  value  of  goods  or  things  hired  or 
purchased  up  to  the  amount  Umited  for  which  a  valid  con- 
tract could  have  been  made,  but  not  beyond  it.^ 

» Walton  V.  Mayor,  26  N.  Y.  App.  Div.  76;  May  v.  Gloucester,  174  Mass. 
583,  55  N.  E.  465;  Fire  Exting.  Mfg.  Co.  v.  Perry,  8  Okla.  429,  58  Pac.  635. 
*  May  V.  Gloucester,  supra.    See  §  130,  ante. 


228 


CHAPTER  XXII 

REJECTION     OF    BIDS — REMEDY     OF     LOWEST    BIDDER — 
RELETTING 

§  147.  Remedy  of  Lowest  Bidder  Where  No  Award  is 
Made. 

If  the  right  to  reject  bids  is  conferred  by  statute  upon 
the  pubUc  body  or  the  advertisement  reserves  such  right, 
the  pubHc  body  may  reject  all  bids,  but  the  exercise  of  such 
power  must  be  in  good  faith,  with  moral  honesty  and  not 
arbitrary.^  Even  if  such  right  is  not  reserved  or  saved  in 
any  fashion  the  public  authorities  may  in  the  public 
interest  reject  all  bids.^  Or  if  there  be  no  statutory  objec- 
tion the  award  may  be  made  in  good  faith  to  one  not  the 
lowest  bidder.  3  As  stated  before  this  award  is  a  judicial 
act,  the  exercise  of  a  discretion  vested  by  law  in  certain 
administrative  officers,  and  the  exercise  of  this  discretion 
and  judgment  cannot  be  controlled  by  mandamus  so  as  to 
compel  the  execution  of  a  contract.''    If  the  public  body 

1  People  ex  rel.  Assyrian  A.  Co.  v.  Kent,  160  111.  655,  43  N.  E.  760;  McGovem 
V.  Trenton  Bd.  of  Public  Wks.,  57  N.  J.  L.  580,  31  Atl.  613;  People  v.  Troy, 
78  N.  Y.  33;  Bradley  v.  Van  Wyck,  65  N.  Y.  App.  Div.  293;  People  ex  rel. 
Shay  V.  McCormack,  167  Id.  854. 

^Yamold  v.  Lawrence,  15  Kan.  103;  Trapp  v.  Newport,  115  Ky.  840,  74 
S.  W.  1109;  Walsh  v.  New  York,  113  N.  Y.  142,  20  N.  E.  825;  Erving  v.  New 
York,  131  N.  Y.  133,  29  N.  E.  1101;  Chippewa  B.  Co.  v.  Durand,  122  Wis.  85, 
99  N.  W.  603;  Colorado  Pav.  Co.  v.  Murphy,  78  Fed.  28. 

3  Bradley  v.  Van  Wyck,  65  N.  Y.  App.  Div.  300. 

«  People  ex  rel.  Shay  v.  McCormack,  supra;  People  ex  rel.  Francis  v.  Comm. 
Council  of  Troy,  78  N.  Y.  33;  People  ex  rel.  Lunney  v.  Campbell,  72  N.  Y. 
496;  State  ex  rel.  Walton  v.  Hermann,  63  Ohio  St.  440,  59  N.  E.  104;  Johnson 
V  Sanitary  Dist.,  163  111.  285,  45  N.  E.  213;  Talbot  Pav.  Co.  v.  Detroit,  91 
Mich.  262,  51  N.  W.  933;  Capital  Print  Co.  v.  Hoey,  124  N.  C.  767,  33  S.  E.  160; 
Amer.  Pav.  Co.  v.  Wagner,  139  Pa.  623,  21  Atl.  160;  Molloy  v.  New  Rochelle, 
198  N.  Y.  402,  92  N.  E.  94. 

229 


§  147  ]  CREATION    OF   THE    CONTRACT  [  PART  II 

makes  an  award  to  one  who  was  not  the  lowest  bidder, 
rejecting  the  latter's  bid  in  violation  of  the  statute  or 
charter  provisions,  this  action  will  not  give  a  cause  of 
action  to  the  person  making  the  lowest  bid  for  damages 
for  failure  to  award  the  contract  to  him.  In  such  a 
case  there  is  no  contractual  relation,  since  the  contractor's 
bid  was  never  accepted.  Therefore  such  an  action  cannot 
be  sustained  as  upon  contract.  Furthermore,  since  these 
statutes  are  not  enacted  for  the  benefit  of  the  bidder  or  of 
the  unsuccessful  bidder,  but  for  the  benefit  of  public 
taxpayers,  they  cannot  recover  by  virtue  of  the  statute.^ 
The  courts  will  not,  where  bids  are  rejected,  attempt  to 
control  the  discretion  of  pubhc  officials  or  bodies  by 
judicial  revision,  but  will  leave  the  exercise  of  discretion  to 
those  in  whom  by  law  it  is  vested.  But  where  the  public 
body  acts  to  make  an  award,  and  the  statute  requires  that 
it  be  made  to  the  lowest  bidder,  the  award  to  one  who  is 
not  the  lowest  bidder  is  not  the  exercise  of  any  discretion, 
but  is  made  in  disobedience  to  law.  The  rejection  of  all 
bids  might  be  a  judicial  act.  The  award  to  one  in  viola- 
tion of  law  is  not.  In  such  case  there  is  no  discretion  but 
to  follow  the  law,  and  where  the  command  of  the  statute 
is  disregarded  and  disobeyed  the  courts  will  compel 
obedience  to  it  by  mandamus  provided  parties  act  in  time 
and  before  the  contract  awarded  to  another  is  completed. 
It  is  a  legal  discretion  and  not  a  personal  discretion  which 
is  vested  in  public  bodies  in  such  circumstances. ^    When 

'  Molloy  V.  New  Rochelle,  123  App.  Div.  642,  198  N.  Y.  402,  92  N. 
E.  94;  Palmer  v.  Haverhill,  98  Mass.  487;  Talbot  Pav.  Co.  v.  Detroit,  109 
Mich.  G.57,  67  N.  W.  979;  Beckwith  i;.  New  York,  121  N.  Y.  App.  Div. 
462. 

2  Talbot  Pav.  Co.  v.  Detroit,  109  Mich.  657,  67  N.  W.  979,  91  Mich.  262, 
51  N.  W.  933;  Borem  v.  Comm'rs  Darke  County,  21  Ohio  St.  311;  Qucpre 
Walsh  V.  Mayor,  113  N.  Y.  142,  20  N.  E.  825;  People  ex  rel.  Coughlin  v.  Gleason, 
121  N.  Y.  631,  25  N.  E.  4;  Molloy  v.  New  Rochelle,  supra. 

230 


CHAP.  XXII  ]  REJECTION   OF   BIDS  [  §  147 

the  statute  makes  the  measure  of  power  an  award  to  the 
lowest  bidder,  both  power  and  discretion  are  Umited  ac- 
cordingly, but  in  such  case  the  pubHc  body  may  in  good 
faith  and  for  the  pubHc  interest  make  no  award.  In  such 
a  situation,  although  it  might  have  no  authority  to  make 
any  award  to  any  other  bidder,  it  cannot  be  forced  by 
court  interference  to  make  the  award  to  the  lowest  bidder.^ 
Even  where  the  statute  or  charter  gives  to  the  public  body 
the  choice  of  a  bidder  and  authority  to  make  the  award  to 
the  one  who  is  the  lowest  responsible  bidder  or  the  lowest 
and  best  bidder,  or  the  most  favorable  bidder,  the  powers 
thus  vested  call  for  a  judicial  determination  and  they  may 
not  arbitrarily  reject  the  lowest  and  accept  a  higher  bid.^ 
In  order  to  give  its  action  any  legal  effect  it  must  in  the 
exercise  of  its  authority  make  a  determination  based  upon 
facts.  An  arbitrary  determination  without  any  facts 
justifying  it  cannot  have  the  effect  of  a  judicial  deter- 
mination, but  is  a  clear  violation  of  law.^  Public  officers 
in  reaching  a  proper  decision  as  to  which  of  the  contract- 
ors measure  up  to  these  varying  standards  of  bidders 
have  the  right  in  making  the  judicial  determination  called 
for,  to  consider  their  capacity  and  ability  to  perform  the 
work,  their  financial  responsibility,  their  skill  and  integrity 
and  similar  qualifications.  It  is  by  a  consideration  of 
these  that  they  are  to  exercise  their  jurisdiction  and 
determine  who  is  the  best  lowest  bidder,  the  most  favor- 

1  Rice  V.  Bd.  of  Town  of  Haj-wards,  107  Cal.  398,  40  Pac.  551;  Anderson  v. 
Bd.,  etc.,  of  St.  Louis  Pub.  Schools,  122  Mo.  61,  27  S.  W.  610;  State  ex  rel. 
Peo.  L.  Co.  V.  Holt,  132  Wis.  131,  111  N.  W.  1106;  State  v.  New  Orleans,  48 
La.  Ann.  643,  19  So.  690;  Walsh  v.  Mayor,  s^ipra. 

^  People  ex  rel.  Coughlin  v.  Gleason,  supra;  Gilmore  v.  Utica,  131  N.  Y.  26, 
29  N.  E.  841;  Faist  v.  Hoboken,  72  N.  J.  L.  361,  60  Atl.  1120;  Berry  v.  Tacoma, 
12  Wash.  3,  40  Pac.  414;  Trapp  v.  Newport,  supra;  Gunning  Gravel  Co.  v. 
New  Orleans,  45  La.  Ann.  911,  13  So.  182. 

'  People  ex  rel.  Coughlin  v.  Gleason,  supra;  Murray  v.  Bayonne,  73  N.  J.  L. 
313,  63  Atl.  81. 

231 


§  147  ]  CREATION   OF   THE   CONTRACT  [  PART  II 

able  or  most  responsible  lowest  bidder.^  If  these  and 
other  facts  are  considered  and  no  fraud  is  shown,  and 
there  is  no  abuse  of  power,  the  action  of  the  public  body  is 
final,  and  the  exercise  by  it  of  the  discretion  vested  in  it  by 
law  may  not  be  interfered  with  or  usurped  by  the  courts.^ 

§  148.  Remedy  of  Lowest  Bidder  where  Award  is  Made  but 
Public  Body  Refuses  to  Execute  Contract — 
Mandamus  to  Compel  Execution. 

Sometimes  in  public  contract  cases  it  appears  that  a 
prospective  contractor  is  the  lowest  bidder  for  a  contract 
under  an  advertisement  for  proposals,  that  his  bid  has 
been  accepted  and  the  contract  has  been  awarded  to  him, 
and  that  he  has  furnished  the  security  required  by  law 
and  has  conformed  to  the  other  provisions  of  law  upon  the 
subject.  These  circumstances  make  out  a  bidder's  clear 
legal  right  to  the  contract.  Even  if  the  proceedings  are 
all  regular  and  conducted  according  to  law,  and  the  bidder 
has  in  all  respects  conformed  to  provisions  and  require- 
ments of  the  advertisement  and  the  charter,  he  may  not 
have  a  writ  of  mandamus  to  compel  the  execution  of  a 
contract  to  him.^  The  reason  for  this  rule  is  that  he  has  a 
right  of  action  against  the  public  body  for  all  damages 
which  he  has  sustained  by  reason  of  the  refusal  to  execute 

1  Gilmore  v.  Utica,  supra;  Inge  v.  Bd.  of  Pub.  Wks.,  135  Ala.  187,  33  So. 
678;  Madison  v.  Baltimore  Harbor  Bd.,  76  Md.  395,  25  Atl.  337;  State  v. 
Hermann,  62  Ohio  St.  440,  59  N.  E.  104;  Philadelphia  v.  Pemberton,  207  Pa. 
St.  814,  57  Atl.  516. 

2  Johnson  v.  Chicago  San.  Dist.,  163  111.  285,  45  N.  E.  213;  Nelson  v.  New 
York,  131  N.  Y.  4,  29  N.  E.  814;  Madison  v.  Harbor  Bd.,  supra;  State  v.  Her- 
mann, 63  Ohio  St.  440,  59  N.  E.  104;  Peckham  v.  Watsonville,  138  Cal.  242, 
71  Pac.  169;  Barber  A.  P.  Co.  v.  Trenton,  74  N.  J.  L.  430,  65  Atl.  873. 

2  People  ex  rel.  Lunney  v.  Campbell,  72  N.  Y.  496;  People  ex  rel.  Dowdney 
V.  Thompson,  99  N.  Y.  641,  1  N.  E.  542;  MoUoy  v.  New  Rochelle,  198  N.  Y. 
402,  92  N.  E.  94;  People  ex  rel.  Buffalo  Pav.  Co.  v.  Mooney,  4  N.  Y.  App.  Div. 
557;  People  ex  rel.  Ajas  v.  Bd.  of  Educ,  104  Id.  162;  People  ex  rel.  Fisher  v. 
Lennon,  147  Id.  640,  206  N.  Y.  691,  99  N.  E.  1115. 

232 


CHAP.  XXII  ]  REJECTION   OF  BIDS  [  §  148 

and  carry  out  the  contract.^  Public  bodies  possess  the 
same  legal  right  which  private  persons  possess  to  violate, 
abandon  or  renounce  their  contracts  upon  the  usual  terms 
of  compensation  for  damages  which  the  law  recognizes 
and  allows. 2  This  right  exists  subject  to  the  rare  exception 
where  specific  performance  might  be  allowed  in  an  ap- 
propriate case.  This  right  to  pay  damages  rather  than 
render  performance  could  be  urged  as  a  further  reason  for 
refusing  mandamus  in  such  cases.  It  is  said,  however,  that 
the  matter  is  one  resting  in  the  sound  discretion  of  the 
court  to  which  the  application  is  addressed  to  grant  or 
refuse  mandamus  under  the  circumstances  and  that  the 
exercise  of  such  discretion  is  not  subject  to  review.^  In 
the  cases  where  an  award  is  made  to  one  bidder  and  there 
is  a  refusal  to  execute  any  contract  with  any  bidder,  the 
public  body  must  be  left  free  under  the  foregoing  prin- 
ciples to  pay  damages,  and  the  determination  of  pubUc 
officials  that  this  is  for  the  best  interests  of  the  public 
body  should  not  be  interfered  with  by  the  courts.  If, 
however,  the  withholding  or  granting  of  mandamus  rests 
in  discretion,  it  would  seem  the  court  should  exercise  its 
discretion  against  public  officials  who  have  no  option  under 
a  statute  but  to  make  an  award  to  the  lowest  bidder. 
When  they  undertake  to  violate  that  statute  and  make  an 
award  to  some  one  other  than  the  lowest  bidder,  the 
court's  discretion  should  be  exercised  against  officials  who 
possess  no  discretion  but  are  violating  the  law.  This 
seems  to  be  the  modern  tendency.^ 

'Lynch  v.  Mayor,  2  N.  Y.  App.  Div.  213;  Pennell  v.  Mayor,  17  Id.  455; 
Danolds  v.  State,  89  N.  Y.  36,  42  Am.  Rep.  277;  Lord  v.  Thomas,  64  N.  Y.  107. 

2  Lord  V.  Thomas,  supra;  Danolds  v.  State,  supra. 

'  People  ex  rel.  Lunney  v.  Campbell,  supra. 

*  MoUoy  V.  New  Rochelle,  198  N.  Y.  402,  92  N.  E.  94  {Quaere);  Talbot  Pav. 
Co.  V.  Detroit,  109  Mich.  657,  67  N.  W.  979,  91  Mich.  262,  51  N.  W.  933; 
Boren  t;.  Comm'rs  Darke  County,  21  Ohio  St.  311. 

233 


§  149  ]  CREATION   OF  THE   CONTRACT  [  PART  II 

§  149.  Rights  of  Unsuccessful  Bidder. 

The  provisions  of  the  statutes  relating  to  the  award  of 
pubhc  contracts  are  for  the  benefit  of  the  property  owners 
and  taxpayers  of  the  pubhc  body  and  not  in  the  interest 
or  for  the  benefit  of  contractors  or  bidders  for  pubUc 
work.  An  unsuccessful  bidder  may  not  maintain  a  suit 
for  their  violation.^  Nor  may  he  maintain  a  taxpayer's 
action  for  hke  reasons,  unless  he  has  property  that  will  be 
injured  by  the  violation  of  the  provisions  of  law  relied 
on.'  He  must  show  that  he  had  an  interest  in  the  per- 
formance of  the  duty  imposed  by  statute,  and  that  the 
duty  was  imposed  for  his  benefit.  Until  he  does,  the 
courts  must  withhold  their  hands.'  Neither  can  the 
lowest  bidder  compel  the  issue  of  a  wait  of  mandamus  to 
force  public  officers  to  enter  into  a  contract  with  him.* 
Nor  can  he  maintain  an  action  at  law  for  damages  for 
their  refusal  to  enter  into  a  contract  with  him.^  For  like 
reasons  he  has  no  standing  in  equity  to  obtain  injunction 
or  other  rehef.^  Where  of  course  a  bidder  is  a  taxpayer 
and  is  affected  as  such  by  a  refusal  to  award  a  contract  or 
because  of  an  illegal  award  to  another,  he  may  bring 
a  taxpayer's  action.^  Such  an  action  is,  however,  an 
equitable  action  to  be   governed  by  equitable  principles, 

1  Colorado  Pav.  Co.  v.  Murphy,  78  Fed.  28. 

2  Idem. 
'  Iflem. 

*  MoUoy  V.  New  Rochelle,  198  N.  Y.  402,  409,  92  N.  E.  94;  State  v.  Board  of 
Fond  Du  Lac,  24  Wis.  683;  Comm.  v.  Mitchell,  82  Pa.  St.  343,  350;  Kelly  v. 
Chicago,  62  111.  279;  State  v.  McGrath,  91  Mo.  386,  3  S.  W.  846;  Madison  v. 
Harbor  Board,  76  Md.  395,  25  Atl.  337;  Colorado  Pav.  Co.  v.  Murphy, 
supra. 

^  Molloy  V.  New  Rochelle,  supra;  Talbot  Pav.  Co.  v.  Detroit,  109  Mich. 
657,  67  N.  W.  979;  East  River  Gaslight  Co.  v.  Donnelly,  93  N.  Y.  557;  Colorado 
Pav.  Co.  V.  Murphy,  supra. 

"  Colorado  Pav.  Co.  v.  Murphy,  supra. 

^  Molloy  V.  New  Rochelle,  supra;  Nathan  v.  O'Brien,  117  N.  Y.  App.  Div. 
664.    See  §§  147,  148,  ante. 

234 


CHAP.  XXII  ]  EEJECTION   OF  BIDS  [  §  150 

and  equity  will  not  act  where  the  remedy  at  law  is  ad- 
equate.^ 

§  150.  Reletting. 

Where  statutes  require  advertising  for  bids  for  the  con- 
struction of  pubhc  work  and  the  award  of  the  contract  to 
the  lowest  bidder,  if  the  statute  does  not  in  terms  cover 
the  reletting  of  the  contract  when  abandoned,  but  is  silent 
upon  this  subject,  the  public  body  may  relet  the  contract 
without  competition. 2  This  is  especially  true  where  the 
original  contract  expressly  provides  that  in  case  the  con- 
tractor unnecessarily  delays  the  work,  defaults  in  other 
ways  or  abandons  it,  the  public  body  may  complete  the 
same  by  contract  or  otherwise  at  the  expense  of  the  con- 
tractor. ^  In  some  jurisdictions,  however,  these  statutes  are 
declared  to  apply  to  unfinished  improvements  made  so 
through  abandonment  by  the  contractor,  and  contracts 
relet  without  advertisement  are  held  invalid.^  But  where 
by  the  contract  the  public  body  is  authorized  to  finish  the 
work  as  the  agent  of  the  contractor  and  for  his  account, 
even  if  the  statute  requires  readvertising  in  case  of  aban- 
donment, it  can  have  no  application  where  the  public  body 
itself  finishes  the  work  under  such  provision.^  If  the 
statute  requires  the  abandoned  work  to  be  relet  under 
advertisement  this  method  must  be  pursued  to  create  a 
valid  contract.  And  of  course  without  such  a  provision 
where  the  abandonment  is  at  the  time  bids  are  made, 
the  public  body  would  have  the  right  to  reject  all  other 

1  Southern  Leasing  Co.  v.  Ludwig,  217  N.  Y.  100,  103,  111  N.  E.  470. 

2  Matter  of  Leeds,  53  N.  Y.  400;  Bass  F.  &  M.  Works  v.  Parke  County,  115 
Ind.  234,  17  N.  E.  593. 

'  Matter  of  Leeds,  supra;  Simermeyer  v.  Mayor,  16  N.  Y.  App.  Div.  445. 
^  Chicago  V.  Hanreddy,  211  111.  24,  71  N.  E.  834;  Meuser  v.  Risdon,  36  Cal. 
239. 

6  Simermeyer  v.  Mayor,  supra. 

235 


§  150  ]  CREATION  OP  THE    CONTRACT  [  PART  II 

bids  and  readvertise.^  On  the  other  hand,  the  public  body 
may  award  to  the  next  lowest  bidder  without  readvertis- 
ing  in  case  the  award  is  not  accepted  by  the  contractor,  or 
after  acceptance  and  part  performance  he  abandons  the 
work.-  But  this  power  may  not  be  exercised  with  fraud- 
ulent disregard  of  public  rights  and  a  reletting  made  to 
one  whose  bid  is  higher  than  other  bidders.^ 

Where  the  contractor  defaults  in  his  contract  after  some 
of  the  work  has  been  performed  and  after  he  has  earned 
and  been  paid  certain  installment  payments,  and  the 
public  body  retains  certain  percentages  of  these  install- 
ments, as  security  for  the  faithful  performance  of  the 
contract,  if  the  contract  is  relet,  in  order  to  hold  such 
retained  amounts,  the  contract  as  let  must  be  identical 
with  the  original  contract.^  If  the  contract  is  relet  at  a 
less  cost,  the  resulting  saving  does  not  give  any  benefit  to 
the  original  contractor.^ 

1  People  ex  rel.  Frost  v.  Foy,  3  Lans.  398;  State  ex  rel.  Clough  v.  Shelby 
County,  36  Ohio  St.  326;  Goss  v.  State  Capitol  Coram.,  11  Wash.  474,  39  Pac. 
972;  U.  S.  ex  rel.  Inter.  Cont.  Co.  v.  Lamont,  155  U.  S.  303. 

2  Chicago  San.  Dist.  v.  McMahon  &  Co.,  110  111.  App.  510;  Gibson  v.  Owens. 
115  Mo.  258,  21  S.  W.  1107;  Kinsella  v.  Auburn,  54  Hun,  634;  State  ex  rel, 
Xenia  M.  Co.  v.  Licking  Co.,  26  Ohio  St.  531;  Contra  Twiss  v.  Pt.  Huron,  63 
Mich.  528,  30  N.  W.  177. 

3  Mitchell  V.  Milwaukee,  18  Wis.  93. 

*  WilUams  v.  U.  S.,  28  Ct.  CI.  518;  Quinn  v.  U.  S.,  99  U.  S.  30,  25  L.  Ed.  269; 
U.  S.  V.  Axman,  234  U.  S.  36,  58  L.  Ed.  1198,  aff'g  193  Fed.  644;  Dobson  v. 
U.  S.,  31  Ct.  CI.  422. 

^  Idem. 


236 


CHAPTER  XXIII 

STIPULATIONS  OF  THE  CONTRACT 

§  151.  Legal  Stipulations — Illegal  Stipulations. 

Public  bodies  have  the  right  and  the  duty  to  insert  in 
pubUc  contracts  such  reasonable  stipulations  as  will  tend 
to  serve  and  protect  the  public  interests  and  more  effectu- 
ally require  the  contractor  to  perform  his  duty  with  strict- 
ness and  fidelity.  It  is  usual  to  provide  for  the  doing  of 
the  work  under  direction  of  the  public  engineer  or  archi- 
tect, to  whose  orders  and  directions  the  contractor  is  sub- 
ject. The  manner  of  payment  in  installments  is  provided 
upon  certificates  of  such  officer,  and  all  rights  are  reserved 
under  what  is  usually  denominated  the  estoppel  clause 
until  the  issuance  of  a  final  certificate.  It  is  proper  to 
insert  a  stipulation  reserving  the  right  to  annul  the  con- 
tract, change  details  of  the  contract  or  suspend  the  work. 
Provision  may  also  be  made  for  the  doing  of  extra  work  at 
contract  prices,  and  to  add  to  or  reduce  the  amomit  of 
work,  and  these  and  similar  provisions  are  uniformly  up- 
held.^ Provisions  requiring  a  contractor  to  meet  all  loss  or 
damage  arising  out  of  the  nature  of  the  work  done  and  to 
restore  the  surface  of  the  street  to  the  condition  in  which 
it  was  found,  are  valid. ^  Imposing  liability  for  damages 
resulting  from  the  negligence  of  the  contractor  is  proper, 

» New  York  v.  Union  News  Co.,  222  N.  Y.  263,  118  N.  E.  635;  U.  S.  v. 
McMuUen,  222  U.  S.  460,  56  L.  Ed.  269;  Matter  of  Merriam,  84  N.  Y.  596; 
Milwaukee  v.  Raulf,  164  Wis.  172,  159  N.  W.  819;  Brady  v.  Mayor,  132  N.  Y, 
415,  30  N.  E.  757;  McManus  v.  Philadelphia,  201  Pa.  St.  619,  51  Atl.  322; 
State  ex  rel.  Bartelt  v.  Liebes,  19  Wash.  589,  54  Pac.  26. 

2  Diver  v.  Keokuk  Sav.  Bk.,  126  Iowa,  691,  102  N.  W.  542, 

237 


0^ 


§  151  J  CREATION   OF   THE    CONTRACT  [  PART  II 

as  is  provision  that  the  contractor  shall  not  assign  any 
moneys  due  under  the  contract,^  or  shall  not  assign  without 
the  consent  of  the  public  body.-  A  stipulation  that  all 
disputes  shall  be  submitted  to  the  decision  of  a  particular 
person,  such  as  an  architect,  engineer  or  other  officer,  is 
^•aUd.^  A  requirement  that  a  contractor  obtain  his  mate- 
rial from  the  public  body  is  valid,  ^  although  a  similar  re- 
quirement to  obtain  it  by  purchase  from  citizens  of  the 
same  body  has  been  said  to  be  invalid.^ 

§  152.  Legal  Stipulations — Provision  for  Arbitration. 

It  is  an  incident  or  term  of  every  contract  that  the 
parties  shall  have  the  right  to  resort  to  a  court  of  law  for 
a  settlement  and  adjustment  of  their  disputes.  Any  provi- 
sion to  the  contrary  is  void  because  in  contradiction  to  the 
rest  of  the  contract.  Parties  cannot  contract  that  the 
courts  shall  not  have  jurisdiction  to  enforce  damages 
arising  on  a  right  of  action.  They  cannot  enter  into  a 
contract  the  breach  of  which  gives  a  cause  of  action  and 
then  deny  to  the  courts  the  right  to  hear  it.  Parties  to  a 
contract  cannot,  therefore,  undertake  by  an  independent 
stipulation  or  agreement  for  the  settlement  and  adjust- 
ment of  all  disputes  by  arbitration  and  deny  jurisdiction 
to  the  ordinary  tribunals  provided  by  law.  They  will  be 
permitted,  however,  by  the  same  agreement  which  creates 
an  obligation   and   gives  a  right  of  action    for    its  non- 

1  Hobbs  V.  McLean,  117  U.  S.  567,  29  L.  Ed.  940;  Goodman  v.  Niblack,  102 
U.  S.  556,  26  L.  Ed.  229. 

2  Burck  V.  Taylor,  152  U.  S.  634,  38  L.  Ed.  578;  Fortunate  v.  Patten,  147 
N.  Y.  277,  41  N.  E.  572;  Hackett  v.  Campbell,  10  N.  Y.  App.  Div.  523,  159 
N.  Y.  537,  53  N.  E.  1125;  O'Corr  v.  Little  Falls,  77  N.  Y.  App.  Div.  592,  178 
N.  Y.  662,  70  N.  E.  1104;  Burnett  v.  Jersey  City,  31  N.  J.  Eq.  341. 

'  Jones  V.  New  York,  60  N.  Y.  App.  Div.  161,  174  N.  Y.  517,  66  N.  E. 
1113. 

♦  Matter  of  Merriam,  84  N.  Y.  596. 

*  Diver  v.  Keokuk  Sav.  Bk.,  supra. 

238 


CHAP.  XXIII  ]      STIPULATIONS   OF   THE    CONTRACT  [  §  152 

performance,  to  qualify  the  right,  by  requiring  that  before 
a  cause  of  action  shall  arise  certain  facts  shall  be  deter- 
mined or  amounts  or  values  ascertained  and  arrived  at, 
or  that  a  third  person  must  perform  specific  acts  or  deter- 
mine certain  questions,  and  they  may  make  this  a  condi- 
tion precedent  to  suit.^  Where  a  stipulation  or  agreement 
submits  all  future  controversies  to  arbitration,  whether 
the  rights  impaired  flow  out  of  the  contract  or  independ- 
ently of  it,  as  from  negligence,  such  provision  is  invalid  as 
ousting  the  courts  of  jurisdiction. ^  Agreements  to  submit 
all  disputes  to  arbitration  on  questions  of  price,  value, 
quantity  or  damage  only,  are  valid  and  do  not  oust  the 
courts.  Provisions  for  arbitration  which  are  indefinite, 
impracticable  and  unreasonable  will  not  be  sustained.^ 
Provisions  which  withdraw  all  controversies  arising  under 
contracts  from  the  courts  and  submit  them  to  arbitration 
will  not  be  enforced.'*  But  where  it  limits  the  questions 
to  the  amount  or  quantity  of  work  to  be  paid  for,  and  to 
all  questions  relative  to  fulfillment,  it  does  not  offend  the 
rule  and  the  certificate  of  the  engineer  in  these  respects  is  a 
necessary  precedent  fact  to  a  recovery.  ^  In  like  manner 
provisions  for  the  settlement  of  all  disputes  as  to  extra 
work  will  be  upheld,  if  they  merely  qualify  the  right  of 
action  by  providing  a  method  under  which  certain  facts 
shall  be  determined  and  amounts  and  values  ascertained, 
as  a  condition  precedent  to  action.  But  if  their  purpose 
and  effect  is  to  oust  courts  of  jurisdiction  they  will  be 


» Seward  v.  Rochester,  109  N.  Y.  164,  16  N.  E.  348;  Dhrew  v.  Altoona,  121 
Pa.  St.  401,  15  Atl.  636. 

^  Seward  v.  Rochester,  supra. 

3  Des  Moines  v.  Des  Moines  W.  Wks.  Co.,  95  Iowa,  348,  64  N.  W.  269. 

*  Nat.  Cont.  Co.  t;.  Hudson  Riv.  P.  Co.,  192  N.  Y.  209,  84  N.  E.  965,  170 
N.  Y.  439,  63  N.  E.  450;  Seward  v.  Rochester,  supra. 

*  Nat.  Cont.  Co.  v.  Hudson  River  Power  Co.,  supra. 

239 


§  152  ]         CREATION  OF  THE  CONTRACT       [  PART  II 

denied  validity.^  Though  a  contractor  is  not  bound  by 
the  decision  of  an  arbitrator  in  event  of  fraud  or  mistake 
so  gross  as  to  miply  bad  faith ;  -  and  of  course  the  same 
rule  appHes  in  favor  of  the  public  body  when  the  acts  of 
the  arbitrator  establish  fraud. ^ 

§  153.  Legal  and  Illegal  Stipulations — Terms  which  May 
be  Inserted. 
The  contract  may  require  a  contractor  to  have  a  proper 
plant  and  adequate  facilities  to  do  the  work  ^  and  it  may 
proWde  that  only  a  contractor  who  has  done  similar  work 
will  have  his  bid  considered.^  It  may  also  provide  that  in 
doing  the  work  the  contractor  shall  limit  the  hours  of 
labor/  and  give  preference  in  employment  on  the  work  to 
be  performed  to  citizens  of  the  State.^  A  provision 
naming  citizens  and  residents  of  a  municipality  as  the  only 
kind  of  labor  that  may  be  employed  has  been  declared 
invalid.^  The  contract  may  validly  limit  liability  to  pay 
for  the  work  until  there  shall  be  funds  in  the  treasury 
properly  applicable  to  the  public  work.^  The  public  body 
may  even  without  statutory  or  charter  authority  insert  a 
clause  providing  for  the  withholding  of  the  contract  com- 

1  People  ex  rel.  Rapid  Trans.  Cons.  Co.  v.  Craven,  210  N.  Y.  443,  104  N.  E. 
922. 

2  Dinsmore  v.  Living.ston  County,  60  Mo.  241. 

3  O'Brien  v.  Mayor,  139  N.  Y.  543,  .35  N.  E.  323. 

*  Knowles  v.  New  York,  37  Misc.  195,  74  App.  Div.  632,  176  N.  Y.  430,  68 
N.  E.  860. 

5  Nathan  v.  O'Brien,  117  N.  Y.  App.  Div.  664. 

8  Medina  v.  Dingledine,  211  N.  Y.  24,  104  N.  E.  1118;  People  ex  rel.  v. 
Coler,  166  N.  Y.  1,  59  N.  E.  716;  Cleveland  v.  Clement  Bros.  Cons.  Co.,  67 
Ohio  St.  197,  65  N.  E.  885;  Re  Dalton,  61  Kan.  2.57,  59  Pac.  336;  Re  Broad,  36 
Wa.sh.  449,  78  Pac.  1004,  70  L.  R.  A.  1011;  Opinion  of  Justices,  208  Mass.  619, 
94  N.  E.  1044;  Keefe  v.  People,  37  Colo.  317,  87  Pac.  791. 

7  People  V.  Crane,  214  N.  Y.  154,  108  N.  E.  427. 

8  Diver  v.  Keokuk  Sav.  Bk.,  126  Iowa,  691,  102  N.  W.  542;  State  v.  Paterson, 
66  N.  J.  L.  129,  48  Atl.  589. 

•  Kransbein  v.  Rochester,  76  N.  Y.  App.  Div.  494,  and  cases  cited. 

240 


CHAP.  XXIII  ]      STIPULATIONS   OF   THE    CONTRACT  [  §  153 

pensation  until  laborers  and  material  are  paid.^  And 
without  like  authority  it  may  provide  that,  if  the  grades 
are  changed  during  the  process  of  the  work,  the  contractor 
shall  conform  to  the  altered  grade  at  the  prices  fixed  so  far 
as  they  apply,  and  such  provision  is  not  violative  of  the 
competitive  bidding  statute  requiring  a  letting  to  the 
lowest  bidder.  2  An  agreement  that  the  engineer  or  archi- 
tect shall  determine  the  quality  or  fitness  of  material  is 
valid.  ^  A  provision  that  the  price  for  laying  sidewalks 
shall  be  uniform  irrespective  of  location  will  be  upheld.^ 
Provision  for  payment  of  the  prevailing  rate  of  wages  to 
those  employed  is  valid,^  although  prior  to  the  constitu- 
tional amendment  upon  the  subject  similar  provisions 
were  held  invalid  as  being  in  violation  of  the  Constitution.^ 
A  requirement  that  laborers  shall  be  paid  in  cash  and  not 
in  store  orders  is  valid  when  inserted  by  virtue  of  a 
statute.^  A  contract  which  reserves  a  right  to  a  water 
company  to  revoke  its  offer  of  free  water  to  a  public 
body  whenever  it  should  see  proper  to  do  so  is  valid,  and 
when  exercised  will  require  payment  for  water  thereafter 
used.^ 

Any  stipulation  which  restricts  the  general  rights  of  the 
public  officials  to  contract,  and  in  so  doing  excludes  all 
persons  not  of  a  certain  designated  class  is  invalid,  espe- 

1  State  ex  rel.  Bartelt  v.  Liebes,  19  Wash.  589,  54  Pac.  26. 

2  Matter  of  Blodgett,  27  Hun,  12. 

3  Barlow  v.  U.  S.,  35  Ct.  CI.  514. 

*  Galveston  v.  Heard,  54  Tex.  420. 

5  Peo.  V.  Coler,  166  N.  Y.  1,  59  N.  E.  716;  Bohnen  v.  Metz,  126  N.  Y.  App. 
Div.  807,  193  N.  Y.  676,  87  N.  E.  1115;  Ewen  v.  Thompson  Starrett  Co.,  208 
N.  Y.  245,  101  N.  E.  894. 

6  People  V.  Orange  County  Road  Cons.  Co.,  175  N.  Y.  84,  67  N.  E.  129; 
People  V.  Grout,  179  N.  Y.  417,  72  N.  E.  464. 

7  People  ex  rel.  North  v.  Featherstonhaugh,  172  N.  Y.  112,  64  N .  E. 
802. 

8  Spring  Brook  W.  Co.  v.  Pittston,  203  Pa.  St.  223,  52  Atl.  249. 

241 


§153]  CREATION    OF   THE    CONTRACT  [  PART  II 

cially  where  it  tends  to  confer  a  monopoly  and  to  impose 
an  additional  burden  upon  the  taxpayers.^  Contracts 
which  provide  that  all  loss  or  damage  arising  from  the 
nature  of  the  work  done  shall  be  sustained  by  the  con- 
tractor are  invalid  as  tending  to  increase  the  cost  of  the 
work.^ 

§  154.  Provisions  as  to  the  Qualifications  of  Those  Em- 
ployed on  Public  Work — Hours  of  Work,  etc. 

A  provision  in  a  public  contract  that  the  contractor 
shall  prefer  in  employment,  citizens  of  the  State  or  of  the 
United  States  will  be  sustained.^  Indeed,  the  courts  have 
declared  that  all  persons  engaged  on  public  works  are  in  a 
vital  sense  in  the  service  of  the  State,  and  public  bodies 
may  therefore  exclude  aliens  from  employment  on  public 
work,  either  in  its  own  employment  or  that  of  independent 
contractors,  and  it  may  lawfully  and  without  invading 
constitutional  limitations  provide  by  law  that  none  but 
citizens  shall  be  employed  on  public  work/  A  provision 
in  the  contract  prohibiting  the  employment  of  convict 
labor  invalidates  the  contract.^  A  stipulation  that  a 
certain  number  of  hours  shall  constitute  a  day's  work  is 
invalid;®  and  it  is  said  that  where  it  increases  the  cost  of 

1  State  ex  rel.  v.  Toole,  26  Mont.  22,  66  Pac.  496;  Paterson  Chronicle  v. 
Paterson,  66  N.  J.  L.  129,  48  Atl.  589;  Atlanta  v.  Stein,  111  Ga.  789,  36  S.  E. 
932. 

2  Blochman  v.  Spreckels,  135  Cal.  662,  67  Pac.  1061,  57  L.  R.  A.  213;  Inge  v. 
Bd.  of  Public  Wks.,  135  Ala.  187,  33  So.  678;  Stansbury  v.  Poindexter,  154 
Cal.  709,  99  Pac.  182;  City  Street  Imp.  Co.  v.  Marysville,  155  Cal.  419,  101 
Pac.  308. 

» U.  S.  V.  Realty  Co.,  163  U.  S.  427,  41  L.  Ed.  215. 

♦  Atkin  V.  Kansas,  191  U.  S.  207,  48  L.  Ed.  148;  Ellis  v.  U.  S.,  206  U.  S.  246, 
51  L.  Ed.  1047;  People  v.  Crane,  214  N.  Y.  154,  108  N.  E.  427;  Givins  v.  People 
(111.),  62  X.  E.  534;  Philadelphia  v.  McLinden,  205  Pa.  172,  54  Atl.  719;  Contra, 
Inge  V.  Bd.  of  Pub.  Wks.,  135  Ala.  187,  33  So.  678;  Glover  v.  People,  201  lU. 
545,  66  N.  E.  820;  Chicago  t;.  Hulbert,  205  111.  346,  68  N.  E.  786. 

'  Inge  V.  Bd.  of  Public  Wks.,  supra. 

•  People  V.  Orange  County  R.  Cons.  Co.,  175  N.  Y.  84,  67  N.  E.  129;  Glover 

242 


CHAP.  XXIII  ]      STIPULATIONS  OF  THE   CONTRACT  [  §  154 

the  work,  and  was  not  mentioned  in  the  advertisement, 
and  therefore  violates  the  provisions  of  the  statute  re- 
quiring letting  to  the  lowest  bidder,  it  is  invalid.^  But  if 
it  did  not  affect  the  bid  the  clause  will  not  be  considered 
to  defeat  an  assessment. ^  So  with  a  clause  which  pro- 
vided that  no  Chinamen  should  be  employed  and  that 
eight  hours  should  constitute  a  day's  work.^  Any  stipula- 
tions which  are  unauthorized,  either  because  not  men- 
tioned in  the  specifications  or  because  illegally  imposed 
upon  the  contractor,  and  which  tend  to  increase  the  cost 
of  the  work,  violate  the  statutes  requiring  the  work  to  be 
let  to  the  lowest  bidder,  and  are  invalid.*  But  when 
provisions  of  this  sort  are  inserted  in  a  contract  because 
of  the  peremptory  language  of  a  statute,  if  the  statute  is 
invalid,  they  have  no  obligatory  or  binding  force  and  it  is 
presumed  were  so  considered  by  the  parties,  and  were 
disregarded  in  the  making  up  of  the  estimate,  so  that  the 
contract  price  was  not  influenced  or  increased  thereby.^  A 
requirement  that  only  union  labor  shall  be  employed  upon 
a  public  contract  is  invalid  as  in  violation  of  constitutional 
limitations.^  So  a  provision  requiring  a  union  label  on 
all  public  printing  is  invalid.'    A  provision  of  an  ordinance 

V.  People,  201  111.  545,  66  N.  E.  820.  See  Peo.  ex  rel.  Williams  Eng.  Co.  v. 
Metz,  193  N.  Y.  148. 

1  De  Wolf  t;.  People,  202  111.  73,  66  N.  E.  868. 

2  Hamilton  v.  People,  194  111.  133,  62  N.  E.  533. 

» Hellman  v.  Shoulters,  114  Cal.  136,  44  Pac.  915. 

4  Anderson  v.  Fuller,  51  Fla.  380,  41  So.  684;  Dickinson  v.  Poughkeepsie,  75 
N.  Y.  65;  Allen  v.  Labsap,  188  Mo.  692,  87  S.  W.  926. 

5  People  V.  Coler,  166  N.  Y.  1,  59  N.  E.  716;  Cleveland  v.  Clements  Bros. 
Const.  Co.,  67  Ohio  St.  197,  65  N.  E.  885;  People  v.  Featherstonhaugh,  172 
N.  Y.  112,  64  N.  E.  802;  Doyle  v.  People,  207  111.  75,  69  N.  E.  639;  Cason  v. 
Lebanon,  153  Ind.  567,  55  N.  E.  768. 

« State  ex  rel.  v.  Toole,  26  Mont.  22,  66  Pac.  496;  Lewis  v.  Detroit  Bd.  of 
Education,  139  Mich.  306,  102  N.  W.  756;  Fiske  v.  People,  188  111.  206,  58 
N.  E.  985;  Adams  v.  Brenan,  177  111.  194,  52  N.  E.  314. 

7  Marshall  &  Bruce  Co.  v.  Nashville,  109  Tenn.  495,  71  S.  W.  815;  Holden 
i).  Alton,  179  111.  318,  53  N.  E.  556. 

243 


§  154  ]  CREATION    OF   THE    CONTRACT  [  PART  II 

imposing   a  minimum  wage   to   be   paid   for   labor  upon 
public  work  is  valid.  ^ 

§  155.  Imposing  Liability  for  Injury  to  Property— In- 
creasing Cost. 
Where  a  contract  provides  that  a  contractor  shall  be 
responsible  for  all  loss  or  damage  occasioned  by  neglect 
and  that  he  shall  assume  all  risk  of  damages  for  all  private 
property  along  the  Une  of  the  work,  including  Habilities 
which  properly  rest  upon  the  pubUc  body,  such  a  contract 
is  invaUd  as  tending  to  increase  the  amount  of  the  bid  for 
the  contract,  and  therefore  increase  the  cost  of  the  work 
either  to  the  public  body  or  abutting  property  owners.^ 
A  stipulation  against  the  employment  of  ahen  or  convict 
labor,  is  a  restriction  upon  a  contractor  which  naturally 
tends  to  cause  him  to  increase  his  price  and  such  a  provi- 
sion invaUdates  the  contract.^ 

§  156.  Stipulation  to  Maintain  Pavement  During  Period  of 
Years. 

Under  the  general  system  for  improvement  of  streets 
with  pavements,  the  original  cost  of  pa\dng  is  paid  as  a 
local  improvement  and  is  borne  by  the  adjoining  owners 
within  an  area  of  assessment  fixed  for  that  purpose,  and 
the  further  cost  of  maintaining  and  repairing  the  pave- 
ment is  paid  for  by  the  public  body  at  large  by  general 
taxation.  In  their  effort  to  get  the  best  pavement  possible 
and  to  enforce  the  promises  of  contractors  which  precede 
the  letting  of  every  contract  as  to  the  durabiUty  of  their 

1  Mallette  v.  Spokane,  77  Wash.  205,  137  Pac.  496;  Clark  v.  State,  142  N.  Y. 
101,  36  N.  E.  817. 

2  Inge  V.  Bd.  of  Public  Works,  135  Ala.  187,  33  So.  678;  Blochman  v.  Sprec- 
kels,  135  Cal.  662,  67  Pac.  1061,  57  L.  R.  A.  213;  City  Street  Imp.  Co.  v. 
MarysviUe,  155  Cal.  419,  101  Pac.  308. 

» Inge  V.  Bd.  of  Public  Works,  supra.  See  Holden  v.  Alton,  179  111.  323,  53 
N.  E.  566. 

244 


CHAP.  XXIII  ]      STIPULATIONS   OF   THE    CONTRACT  [  §  156 

particular  pavement,  public  bodies  usually  provide  by  a 
stipulation  in  the  contract  that  the  contractor  will  guaran- 
tee his  work  during  a  period  of  years,  and  that  in  case 
the  pavement  fails  to  conform  to  the  guaranty  he  will 
make  such  repairs  as  are  needed  during  such  period. 
These  stipulations  have  been  a  fruitful  source  of  contro- 
versy and  their  validity  has  been  questioned  as  in  conflict 
with  the  various  charter  and  statutory  provisions  for  meet- 
ing the  cost  by  this  dual  method  of  local  taxation  for  con- 
struction and  general  taxation  for  maintenance.  It  is 
contended  that  the  insertion  of  such  a  provision  for  main- 
tenance of  the  pavement  during  a  period  of  years  after  its 
acceptance  by  the  pubHc  body  invahdates  the  contract 
because  it  tends  to  increase  the  contract  cost  and  thereby 
imposes  upon  the  property  in  the  locaUty  the  cost  of  re- 
pairs in  violation  of  these  charter  or  statute  provisions 
which  divide  the  cost  of  construction  and  maintenance  by 
putting  the  former  on  the  locality  and  the  latter  upon  the 
general  pubhc  body.  By  the  weight  of  authority  it  has 
been  declared  that  these  provisions  in  contracts  are  in  the 
nature  of  a  guaranty  of  the  quality  and  character  of  the 
work  done,  and  neither  violate  the  statutes  distributing 
the  cost  between  the  municipahty  and  the  locality  nor 
those  which  require  a  letting  to  the  lowest  bidder.  So 
long  as  the  time  during  which  the  guaranty  continues  is  no 
longer  than  the  ordinary  durability  of  the  pavement  when 
laid  with  the  best  workmanship  and  material,  it  does  not 
tend  to  increase  the  cost  and  is  therefore  not  in  violation 
of  the  statutes  cited.  ^     But  the  contrary  view  has  been 

1  People  ex  rel.  North  v.  Featherstonhaugh,  172  N.  Y.  112,  64  N.  E.  802; 
O'Keeffe  v.  New  York,  173  N.  Y.  474,  66  N.  E.  194;  Latham  v.  WUmette,  168 
111.  153,  48  N.  E.  311;  Cole  v.  People,  161  111.  16,  43  N.  E.  607;  Allen  v.  Daven- 
port, 107  lov/a,  90,  101,  77  N.  W.  532;  Osbora  v.  Lyons,  104  Iowa,  160,  73 
N.  W.  650;  Hedge  v.  Des  Moines,  141  Iowa,  4,  119  N.  W.  276;  Shank  v.  Smith, 

245 


§  156  ]  CREATION   OF  THE    CONTRACT  [  PART  II 

taken  that  such  stipulations  tend  to  increase  the  cost  of 
the  work,  and  therefore  contravene  the  statutes  referred  to 
and  render  the  contract  invahd.^ 

A  clause  by  which  the  contractor  agrees  to  maintain  the 
pavement  in  good  order  for  five  years  after  its  acceptance, 
and  to  make  all  repairs  which  may,  from  any  imperfection 
in  the  work  or  material,  or  from  any  crumbling  or  disinte- 
gration, become  necessary,  is  a  guaranty  of  the  quahty  of 
the  materials  used  and  the  character  of  the  work  per- 
formed. ^  And  a  substantially  similar  clause  for  mainte- 
nance during  eight  years  has  been  sustained.^  Where  the 
clause  covers  decay  and  disintegration  from  natural  causes, 
and  defects  caused  by  traffic,  it  conflicts  with  those  provi- 
sions of  statute  or  charter  which  place  the  expense  of  re- 
pairs and  maintenance  upon  the  pubhc  body  at  large  and 
makes  the  contract  void.^ 

§  157.  Effect  of  Legal  and  Illegal  Stipulations. 
"UTiere  plans  and  specifications  were  consulted  by  a  con- 

157  Ind.  401,  61  N.  E.  932;  Barber  A.  P.  Co.  v.  French,  158  Mo.  534,  58  S.  W. 
934;  Barber  A.  P.  Co.  v.  Hezel,  155  Mo.  391,  56  S.  W.  449;  Seaboard  Nat.  Bk. 
V.  Wocstcn,  147  Mo.  467,  48  S.  W.  939;  Barber  A.  P.  Co.  v.  Ullman,  137  Mo. 
543,  38  S.  W.  458;  Sedalia  v.  Smith,  206  Mo.  346,  104  S.  W.  15;  Kansas  City 
V.  Hanson,  60  Kan.  833,  58  Pac.  474;  Wilson  v.  Trenton,  60  N.  J.  L.  394,  38 
Atl.  635,  61  N.  J.  L.  599,  40  Atl.  575;  Robertson  v.  Omaha,  55  Neb.  718,  76 
N.  W.  442;  Bacas  v.  Adler,  112  La.  806,  36  So.  739;  McGlynn  v.  Toledo,  22 
Ohio  Cir.  Ct.  34;  Allen  v.  Portland,  35  Oreg.  420,  58  Pac.  509;  Philadelphia  v. 
Pemberton,  208  Pa.  St.  214,  57  Atl.  516. 

1  Montgomery  v.  Bamett,  149  Ala.  119,  43  So.  92;  Almeda  P.  Co.  v.  Pringle, 
130  Cal.  226,  02  Pac.  394,  52  L.  R.  A.  264;  Excelsior  P.  Co.  v.  Leach,  34  Pac. 
(Cal.)  116;  Brown  v.  Jenks,  98  Cal.  10,  32  Pac.  701;  Gosnell  v.  Louisville,  104 
Ky.  201,  46  S.  W.  722;  Fehler  v.  Gosnell,  99  Ky.  380,  35  S.  W.  1125;  Portland 
V.  Bitum.  Pav.  Co.,  33  Oreg.  307,  52  Pac.  28;  McAllister  v.  Tacoma,  9  Wash. 
272,  37  Pac.  447,  658;  Boyd  v.  Milwaukee,  92  Wis.  456,  66  N.  W.  603. 

2  Wilson  V.  Trenton,  sui/ra;  Barber  A.  P.  Co.  v.  Ullman,  supra;  Kansas  City 
V.  Hanson,  supra;  Latham  v.  Wilmette,  suj/ra. 

'  People  ex  rel.  North  v.  Featherstonhaugh,  supra. 

*  Schenectady  v.  Union  College,  66  Hun,  179;  Bradshaw  v.  Jamestown,  125 
N.  Y.  App.  Div.  86;  Portland  v.  Bitum.  Pav.  Co.,  33  Oreg.  307,  52  Pac.  28; 
Brown  v.  Jenks,  98  Cal.  10,  32  Pac.  701;  Fehler  v.  Gosnell,  99  Ky.  380,  35  S.  W. 
1125;  Boyd  v.  Milwaukee,  92  Wis.  456,  66  N.  W.  603. 

246 


CHAP.  XXIII  ]      STIPULATIONS   OF  THE   CONTRACT  [  §  158 

tractor  before  he  made  his  bid  and  an  examination  of  them 
would  disclose  apparent  discrepancies  in  them,  the  con- 
tractor is  bound  by  a  reasonable  provision  that  if  any- 
apparent  discrepancies  are  found  between  the  plans, 
working  drawings  and  specifications,  the  decision  of  the 
architects  as  to  their  fair  construction  and  true  intent 
and  meaning  shall  be  binding.^  Where  it  provides  that 
after  a  decision  by  the  architect  or  engineer  a  contractor 
may  under  protest  complete  the  work  under  the  interpre- 
tation given,  this  leaves  the  contractor's  rights  open  with- 
out impairment.  2 

§  158.  Covenants  Implied  by  Law — Warranties. 

In  every  contract  for  the  performance  of  public  work 
there  is  an  implied  obhgation  on  the  part  of  the  public 
body  to  give  to  its  contractor  access  to  the  place  at  which 
the  work  is  to  be  performed  and  reasonable  facilities  for 
performing  it.'  When,  therefore,  a  pubhc  body  advertises 
for  bids  for  the  privilege  of  picking  over  refuse  from  its 
streets  at  certain  public  dumps,  and  the  contract  grants  it 
for  the  same  dumps,  the  law  will  necessarily  imply  a  cove- 
nant by  the  public  body  to  deliver  all  its  refuse  gathered 
from  its  streets  at  those  dumps,  even  if  exact  words  to 
that  effect  are  wanting.  Such  additional  or  correlative 
covenant  being  intended,  the  courts  will  supply  it  as  indis- 
pensable to  the  effectuation  of  the  contract.'*  Where  the 
public  body  fails  or  neglects  to  acquire  a  necessary  right  of 
way  for  the  work,  it  fails  in  its  duty  to  put  the  contractor 
in  a  position  to  proceed  with  his  work,  and  is  liable  the 

» KeUy  t;.  Public  Schools  of  Muskegon,  110  Mich.  529,  68  N.  W.  282. 

2  Galveston  v.  Devhn,  84  Tex.  319,  19  S.  W.  395. 

3  New  York  t;.  Continental  A.  Co.,  163  N.  Y.  App.  Div.  486,  aff'd  218  N.  Y„ 
685,  113  N.  E.  1052. 

'  New  York  v.  Delli  Paoli,  202  N.  Y.  18,  94  N.  E.  1077. 

247 


§158]  CREATION    OF   THE    CONTRACT  [  PART  II 

same  as  when  it  fails  to  furnish  a  site  to  the  contractor, 
for  breach  of  an  imphed  warranty  in  that  regard.^  A 
warranty  that  ground  is  of  a  specially  stable  character,  or 
that  it  is  free  from  quicksand,  or  of  the  character  referred 
to  in  the  plans  and  specifications,  will  not  be  implied  in  the 
absence  of  an  express  stipulation  that  there  is  a  warranty 
in  favor  of  the  contractor,  that  the  ground  selected  should 
be  of  a  defined  character,  or  unless  an  unavoidable  imph- 
cation  to  that  effect  arises.  This  rule  appUes  even  though 
a  plan  showing  the  character  of  the  soil  is  submitted  to  the 
contractor  and  is  considered  by  him  in  making  his  bid, 
since  ordinarily  the  risk  of  subsidence  of  the  soil  is  assumed 
by  the  contractor.-  And  where  a  contract  expressly  states 
that  the  nature  of  the  underground  has  not  been  investi- 
gated, and  the  public  body  denies  any  responsibility  for  its 
character,  but  puts  upon  the  contractor  all  losses  resulting 
on  account  of  the  character  of  the  ground  or  because  its 
nature  was  different  than  estimated  or  expected,  no  war- 
ranty of  the  character  of  the  soil  can  be  implied.^  In 
similar  regard  drawings  which  show  the  probable  surface  of 
rock  do  not  imply  a  warranty  as  to  the  depth  at  which 
rock  will  be  found,  in  the  face  of  a  provision  that  if  its 
location  should  be  found  to  differ  from  that  indicated  no 
liabihty  should  result  and  no  warranty  should  be  taken. ^ 
But  positive  assertions  as  to  the  nature  of  the  work  belong 
to  a  different  category.  Upon  these  a  contractor  has  the 
right  to  rely  without  independent  investigations  to  prove  their 
falsity.^    While  ordinarily  a  contractor  assumes  subsidence 


1  Ash  V.  Independence,  79  Mo.  App.  70. 

2  Simpson  v.  U.  S.,  172  U.  S.  372,  43  L.  Ed.  482,  aff'g,  31  Ct.  CI.  217. 

» Rowe  V.  Peabody,  207  Mass.  226,  93  N.  E.  G04;  Kelly  v.  New  York,  87 
N.  Y.  App.  Div.  299,  180  N.  Y.  507,  72  N.  E.  1144. 
*  Kelly  V.  New  York,  supra. 
»  Hollerbach  v.  U.  S.,  233  U.  S.  165,  58  L.  Ed.  898;  Capital  City  B.  &  P.  Co. 

248 


CHAP.  XXIII  ]      STIPULATIONS   OF  THE   CONTRACT  [  §  159 

of  the  soil  in  the  particular  site  upon  which  he  is  to  erect  a 
structure,  and  assumes  the  adequacy  of  existing  systems  of 
drainage  in  such  place  where  he  is  working,  yet  if  in  the 
process  of  constructing  a  public  work  such  as  a  dry  dock, 
the  public  body  by  contract  provision  directs  the  relocation 
of  a  sewer  in  such  place  and  provides  the  character,  dimen- 
sions and  location  of  the  sewer,  the  articles  of  the  contract 
prescribing  these  import  a  warranty  that  if  the  specifica- 
tions are  complied  with  the  sewer  will  be  adequate,  and 
this  implied  warranty  will  not  be  overcome  by  general 
clauses  requiring  the  contractor  to  examine  the  site,  to 
check  up  the  plans  and  to  assume  responsibility  for  the 
work  until  completion  and  acceptance.^  A  contractor  is 
not  precluded  from  reljdng  upon  such  impUed  warranties 
because  of  a  statute  requiring  contracts  to  be  reduced  to 
writing  or  because  of  the  parol  evidence  rule.^  When  in 
the  course  of  the  work  unforeseen  conditions  arise  without 
the  fault  of  either  party  and  are  not  covered  expressly  by 
the  terms  of  the  contract,  and  these  render  performance  of 
the  contract  as  planned  impossible,  make  necessary  sub- 
stantial changes  in  the  nature  and  cost  of  the  contract,  as 
well  as  substantially  afTect  the  remaining  work,  the  law 
reads  into  the  contract  an  implied  condition  when  it  was 
made  that  such  a  contingency  will  terminate  the  contract.^ 

§  159.  Covenants  Implied  by  Law — Warranty  of  Perform- 
ance. 

The  obligation  of  a  contractor  who  undertakes  work  is  to 
erect  the  structure  or  accomphsh  the  work  described  in  the 

V.  Des  Moines,  136  Iowa,  243,  113  N.  W.  835;  U.  S.  v.  Atlantic  Dredg.  Co.,  253 
U.  S.  1,  64  L.  Ed.  735;  U.  S.  v.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 
1 U.  S.  V.  Spearin,  248  U.  S.  132,  63  L.  Ed.  166,  aff'g  51  Ct.  CI.  155. 

2  U.  S.  V.  Spearin,  supra. 

3  Kinser  Const.  Co.  v.  State  (N.  Y.  Ct.  CI.),  125  N.  Y.  Supp.  46,  54. 

249 


§159]  CREATION   OF  THE   CONTRACT  [  PART  II 

plans  and  specifications.  If  the  work  or  structure  does  not 
accomplish  the  results  expected  by  the  pubUc  body  the  loss 
must  fall  upon  it.  There  is  no  implied  stipulation,  that 
when  the  structure  is  erected  or  the  work  accomplished  in 
accordance  with  the  plans  and  specifications,  it  will  be  safe 
or  suitable  for  the  purposes  intended,  or  will  accomplish 
the  results  expected.^  When  the  contractor  is  bound  to 
build  in  accordance  with  the  plans  and  specifications  pre- 
pared by  the  public  body,  the  contractor  is  not  responsible 
for  the  consequences  of  defects  in  them.^  If  the  contractor 
warrants  the  sufficiency  of  his  work  measured  by  the  plans 
and  specifications,  this  is  not  a  warranty  that  the  work 
when  finished  will  accomplish  or  effect  the  purposes  in- 
tended.^ Where  the  specifications  of  a  bridge  provide  it  to 
bear  stated  live  loads,  and  certain  trusses  become  overstrained 
when  subjected  to  such  live  loads  after  construction,  but 
the  work  is  performed  strictly  in  accordance  with  the  speci- 
fications, the  contractor  does  not,  by  agreeing  to  build 
according  to  specifications,  warrant,  that  when  erected,  the 
bridge  will  not  be  overstrained  if  subjected  to  such  five 
loads. ^  The  contractor's  agreement  merely  warrants  in 
such  a  case  that  he  will  comply  with  the  specifications. 
So  where  the  specifications  describe  the  work  contemplated 
as  water-tight,  if  the  specifications  cannot  effect  this  result, 

J  New  York  v.  Penn.  Steel  Co.,  206  Fed.  454;  U.  S.  v.  Spearin,  248  U.  S.  132, 
63  L.  Ed.  166;  Gregory  v.  U.  S.,  33  Ct.  CI.  434. 

^  U.  S.  t'.  Spearin,  supra;  Mcknight  Flintic  Stone  Co.  v.  Mayor,  160  N.  Y. 
72,  54  N.  E.  661;  Filbert  u.  Philadelphia,  181  Pa.  St.  530,  37  Atl.  545;  Bentley 
V.  State,  73  Wis.  416,  41  N.  W.  338;  Dist.  of  Columbia  v.  Clephane,  110  U.  S. 
212,  28  L.  Ed.  122,  aff'g  2  Mackey,  155;  Green  Riv.  A.  Co.  v.  St.  Louis,  188 
Mo.  576,  87  S.  W.  985;  Gilliam  «;.  Brown,  116  Cal.  454,  48  Pac.  486;  Penn. 
Bridge  Co.  v.  New  Orleans,  222  Fed.  737;  Conway  Co.  v,  Chicago,  274  111. 
369,  113  N.  E.  703. 

'  Harlow  e;.  Homestead,  194  Pa.  St.  57,  45  Atl.  87;  Filbert  t;.  Philadelphia, 
181  Pa.  St.  530,  37  Atl.  545;  Lake  View  v.  MacRitchie,  134  111.  203,  25  N.  E. 
663;  Dwyer  v.  New  York,  77  N.  Y.  App.  Div.  224. 

*  New  York  v.  Perm.  Steel  Co.,  206  Fed.  454. 

250 


CHAP.  XXIII  ]      STIPULATIONS   OF  THE   CONTRACT  [  §  159 

the  obligation  of  the  contractor  is  complete  when  he  com- 
plies with  the  specifications.^  But  an  express  warranty 
that  a  public  work  when  completed  will  prove  satisfactory 
and  accomplish  the  purposes  and  objects  intended  is  bind- 
ing, and  the  risk  that  the  plans  will  effect  this  result  is 
upon  the  contractor.-  If  he  warrants  all  of  the  work  to  remain 
in  good  condition  for  one  year  from  acceptance,  this  is  a  war- 
ranty against  all  defects  whatever  their  origin,  and  applies 
alike  to  insufficiency  of  materials,  unskillfulness  of  work,  as 
well  as  to  unfitness  of  plan  and  design,  whether  devised  by 
the  public  body  or  the  contractor.  By  such  a  provision  the 
contractor  necessarily  warrants  the  sufficiency  of  the  plan 
and  the  work  to  satisfy  the  result  intended.^  A  warranty 
of  this  sort  may  be  implied  from  the  language  of  the  con- 
tract.^ But  where  such  a  warranty  is  verbal  and  was  made 
before  the  signing  of  the  written  contract  it  cannot  be 
superadded  thereto  or  proved,  since  it  is  an  integral  part 
of  such  original  contract  and  not  a  separate  agreement  on 
a  matter  consistent  with  the  terms  of  such  writing. ^ 
Where  the  public  body  agrees  to  furnish  suitable  plans, 
drawings  and  specifications,  such  language  impHes  an 
undertaking  on  the  part  of  the  public  body  that  its  archi- 
tect has  sufficient  learning,  experience  and  skill  to  properly 
perform  the  work  required  of  him,  and  that  the  plans, 
drawings  and  specifications  are  suitable  and  efficient  for 
the  purpose  designed,^  and  the  risk  of  sufficiency  and 
efficiency  is  upon  the  public  body  where  subsequently  the 

1  Dwyer  v.  New  York,  supra;  Harlow  v.  Homestead,  supra. 

2  Lake  View  v.  MacRitchie,  supra;  Shoenberger  v.  Elgin,  164  111.  80,  45 
N.  E.  434.  See  Thorn  v.  Mayor,  L.  R.  1  App.  Cas.  120,  aff'g  44  L.  J. 
Exch.  62. 

'  Lake  View  v.  MacRitchie,  supra. 

<  Shoenberger  t;.  Elgin,  164  lU.  80,  45  N.  E.  434,  aff'g  59  111.  App.  384. 

6  Hills  V.  Farmington,  70  Conn.  450,  39  Atl.  795. 

«  Bentley  v.  State,  supra. 

251 


§159]  CREATION   OF  THE   CONTRACT  [  PART  II 

structure  collapses.^  Whenever  the  agreement  is  not  to  do  a 
particular  thing,  but  to  do  it  in  a  particular  way  and  to  use 
the  materials  specified,  as  designed  by  the  pubUc  body,  the 
risk  of  efifecting  its  purpose  falls  upon  the  pubUc  body  and 
no  warranty  by  the  contractor  of  the  sufficiency  of  the  plan 
and   specifications   to  produce   the  desired   result   can   be 
implied.     The  converse  warranty  in  fact  arises  in  the  cir- 
cumstances against  the  public  body.^    Indeed,  a  warranty 
that  work  will  remain  in  perfect  order  and  water-proof  for 
a  stated  period  is  a  warranty  as  to  material  and  workman- 
ship but  not  of  the  plan.^    It  has,  however,  been  declared 
that  no  warranty  would  be  implied  as  to  the  sufficiency  of 
something,  which  is  not  the  thing  contracted  for,  but  a 
mere  means  to  be  employed  in  the  construction  of  the 
work,  and  mentioned  in  the  contract/    So  where  the  State 
or   other  pubUc   body    has   warranted    the   sufficiency  of 
the  plan,  if  the  trouble  is  not  with  it,  but  with  conditions 
of   the   site   which   were   not   within   such   warranty,   but 
which  were  equally  refied  upon  as  sufficient  by  the  parties, 
the  warranty    will  not  apply.^     A   warranty  of  design  or 
plan  will  not,  however,  be  inferred  but  must  be  clearly  ex- 
pressed in  the  contract  or  as  clearly  unplied  from  its  lan- 
guage.^ 

§  160.  Reserved  Right  to  Make  Alterations  and  Suspend 
the  Work. 
A  pro\dsion,  whereby  the  pubhc  body  reserves  the  right, 

1  Bentley  v.  State,  supra. 

2  Kellogg  Bridge  Co.  v.  HamUton,  110  U.  S.  108,  28  L.  Ed.  86;  MacRitchie 
V.  Lake  View,  30  111.  App.  393;  Mac  Knight  Flintic  Stone  Co.  v.  Mayor,  160 
N.  Y.  72. 

»  MacKnight  F.  S.  Co.  v.  Mayor,  sur/ra. 
<  Thorn  V.  Mayor,  supra. 

^KinBcr  Cons.  Co.  v.  State,  204  N.  Y.  381,  97  N.  E.  871,  aff'g   145  N.  Y. 
App.  Div.  41. 
«  Conway  Co.  v.  Chicago,  274  lU.  369,  113  N.  E.  703. 

252 


CHAP.  XXIII  ]      STIPULATIONS   OF  THE   CONTRACT  [  §  160 

until  completion  and  acceptance  of  the  work,  to  make  such 
additions  to  or  deductions  from  the  work  or  changes  in  the 
plans  and  specifications,  as  may  be  necessary,  is  a  valid 
provision,  and  will  authorize  the  pubhc  body  in  good  faith 
to  make  the  changes  provided  both  in  the  plans  and 
specifications,  and  in  the  work,  when  necessary,  without 
rendering  the  contract  invalid,  and  without  subjecting  the 
public  body  to  claims  for  loss  of  profits,  where  such  is  pro- 
vided.^ Of  course,  in  the  absence  of  reserved  rights  of  this~j 
character,  the  public  body,  even  though  it  be  the  State  or 
the  Nation,  may  not  exercise  these  privileges  or  powers,  as  1 
they  cannot  rescind  or  suspend  contracts,  any  more  than  i 
private  persons  may,  without  compensation  in  damages. ^ 
Under  such  a  clause  the  public  body  has  the  right,  wheri-^ 
ever  the  necessity  for  changes  shall  arise,  owing  to  unfore- 
seen conditions  or  contingencies,  to  stop  the  work  in  whole 
or  in  part,  change  the  plans  and  eUminate  such  part  as 
proves  impossible  of  accomplishment.  This  is  the  function 
of  such  a  clause,  to  make  provision  for  contingencies  which 
could  not  be  foreseen  by  ordinary  care  and  prudence.^ 
Where  accordingly  in  the  course  of  construction  of  public 
work  natural  conditions  of  soil  unexpectedly  appear,  and 
this  contingency  is  not  expressly  covered  by  the  contract, 
yet  renders  performance  as  planned  impossible,  and  makes 
necessary  substantial  changes  in  the  nature  and  cost  of  the 
work,  and  substantially  affects  the  remaining  work,  the 
law  will  read  into  the  contract  an  imphed  condition  when 
it  was  made  that  such  a  contingency  will  terminate  the 

1  Clark  V.  Mayor,  4  N.  Y.  338,  342;  Kinser  Cons.  Co.  v.  State,  204  N.  Y. 
381,  97  N.  E.  871,  145  N.  Y.  App.  Div.  481,  125  N.  Y.  Supp.  46;  U.  S.  v. 
McMuUen,  222  U.  S.  460,  56  L.  Ed.  269. 

2  Danolds  v.  State,  89  N.  Y.  36,  42  Am.  Rep.  277;  People  ex  rel.  Graves  v. 
Sohmer,  207  N.  Y.  450,  101  N.  E.  164. 

'  Kinser  Cons.  Co.  v.  State,  supra. 

253 


§  160  ]  CREATION  OF  THE   CONTRACT  [  PART  II 

entire  contract.^  The  clause  will  not  in  every  case  have 
such  effect.  It  depends  upon  whether  the  conditions 
amount  to  a  substantial  abrogation  of  the  contract  or  re- 
late only  to  an  insignificant  part  of  the  contract.  The  con- 
tract will  remain  in  full  force  so  far  as  performed  and  so 
far  as  it  may  be  still  performed.  It  will  excuse  perform- 
ance only  to  the  extent  performance  becomes  impossible 
whether  it  be  all  or  only  a  part  of  the  remaining  work.- 
This  provision  places  no  Hmitation  upon  the  right  to  make 
alterations  other  than  necessity.  Necessity  is  the  sole 
basis  and  standard  for  the  protection  of  both  parties.  It 
protects  the  contractor  from  arbitrary,  capricious  or  unrea- 
sonable action  by  pubUc  officers.  It  guards  the  pubhc 
body  against  unforeseen  conditions,  which  would  render  the 
work  impossible  of  performance  as  originally  planned. 
While  the  necessity  need  not  be  absolute,  it  must  be  rea- 
sonable, for  the  law  writes  the  word  reasonably  before  the 
word  necessary  in  this  term  of  the  contract,  as  unavoidably 
within  the  contemplation  of  the  parties,  especially  where 
the  extent  of  the  work  and  the  expense  is  enormous.^ 
Both  of  the  parties  are  in  the  same  position  at  the  time  of 
discovery  of  these  supervening  conditions.  Under  the  law 
they  must  both  share  the  responsibihties  arising  from  these 
conditions,  which  were  not  anticipated  when  the  contract  was 
made.^  A  change  from  one  kind  of  construction  to  another, 
made  for  no  reason  but  to  save  expense,  and  which  destroys 
the  essential  identity  of  the  thing  contracted  for,  cannot  be 
made  or  justified  and  will  constitute  a  breach  of  the  con- 
tract.^   So  where  the  change  in  plans  is  arbitrary,  radical 

1  Kinser  Cons.  Co.  t;.  State,  supra. 
^  Idem. 
^  Idem. 

*  Idem. 

*  National  Cont.  Co. «;.  Hudson  River  W.  P.  Co.,  192  N.  Y.  209,  84  N.  E.  965. 

254 


CHAP.  XXIII  ]      STIPULATIONS   OF   THE    CONTRACT  [  §  161 

and  subversive  of  the  thing  to  be  done  and  is  made  simply 
because  the  new  construction  is  cheaper,  a  breach  of  con- 
tract results.^  But  when  changes  are  made  by  the  public 
body  through  its  proper  agent,  and  are  dictated  by  impar- 
tial judgment  and  in  good  faith,  they  may  be  made  within 
these  limits  without  liability  other  than  as  provided  in  the 
contract.^  However,  a  provision  of  this  sort,  which  gives 
to  a  public  body  the  power  to  direct  in  good  faith  changes 
in  the  work,  will  not  authorize  them  to  stop  the  work  in  an 
unfinished  state  and  thus  arbitrarily  annul  the  contract.^ 
But  while  such  a  rule  that  such  clauses  are  valid  applies 
ordinarily  to  public  bodies  it  cannot  have  application  in 
<;ases  where  the  letting  of  public  work  is  controlled  by 
strict  statutory  or  charter  Umitations  requiring  the  work 
to  be  let  to  the  lowest  bidder  under  competitive  bids,  if  the 
nature  and  effect  of  the  clause,  reserving  a  general  power  to 
change  the  work  and  materials,  is  to  interfere  with  the  free 
competition  which  the  statute  requires.'* 

§  161.  Reserved  Right  to  Suspend  Work — Who  May  Sus- 
pend Work  —Effect. 
While  these  provisions  for  suspension  of  the  work  are 
valid  and  enforceable,^  they  must  be  properly  exercised.^ 
If  the  power  to  suspend  the  work  is  conmiitted  to  a  partic- 
ular officer  it  may  not  be  delegated  to  or  exercised  by  a 
subordinate  in  his  department.^    Where   the  contract  pro- 

1  McMaster  v.  State,  108  N.  Y.  542,  15  N.  E.  417. 

2  Kingeley  v.  Brooklyn,  78  N.  Y.  200,  208. 

3  Clark  V.  New  York,  4  N.  Y.  338. 

*  Gage  V.  New  York,  110  N.  Y.  App.  Div.  403. 

5  Clark  V.  Pittsburgh,  146  Fed.  441,  154  Fed.  464;  Wakefield  Cons.  Co.  v. 
City  of  New  York,  157  N.  Y.  App.  Div.  535,  213  N.  Y.  633;  Wells  Bros.  Co. 

V.  U.  S.,  254  U.  S.  83,  65  L.  Ed. ;  Mechanics  Bk.  v.  New  York,  164  N.  Y. 

App.  Div.  128. 

« Clark  V.  Pittsburgh,  supra;  Wakefield  Cons.  Co.  v.  New  York,  supra. 

7  Ryan  v.  New  York,  178  N.  Y.  App.  Div.  181,  189. 

255 


§  161  ]  CREATION  OF  THE  CONTRACT  [  PART  II 

\-ides  that  the  work  may  be  suspended,  if  it  is  deemed  for 
the  interest  of  the  city  without  compensation  to  the  con- 
tractor, other  than  an  extension  of  time  specified  for  com- 
pletion, the  remedy  thus  provided  for  the  consequences  of 
its  breach  is  exclusive.^  A  pubhc  body  is  not  authorized, 
under  a  clause  permitting  suspension  of  the  work  when 
deemed  for  its  best  interests,  to  suspend  the  work  merely 
because  it  had  no  appropriation  to  pay  for  engmeering 
inspection,  which  it  was  bound  to  furnish,  since  the  power 
given  is  not  an  arbitrary  power  and  may  not  be  so  unrea- 
sonably exercised  against  a  contractor.^  But  a  plain  and 
unrestricted  covenant  conferring  right  of  delay  without 
hability  will  not  be  treated  as  meaningless  and  read  out  of 
the  contract.' 

§  162.  Reserved  Right  to  Annul. 

While  the  validity  of  clauses  which  reserve  these  powers 
of  suspension  or  annuhnent  is  questionable  from  the  view- 
point of  mutuaUty,^  they  are  generally  sustained  as  valid 
provisions.  It  is  accordingly  within  the  power  of  public 
bodies  to  provide  by  contract,  that  it  shall  have  the  right, 
for  the  best  interests  of  the  public  body,  or  for  any  reason 
appearing  sufficient  to  them,  to  suspend  the  progress  of  the 
work  or  annul  the  contract  altogether,  on  giving  the  notice 
required  by  the  contract,  and  that  they  shall  have  no 
hability  other  than  to  extend  the  time  stated  for  comple- 
tion.^ But  when  this  right  is  exercised  the  pubhc  body 
must  keep  within  the  conditions  of  its  exercise  as  provided 
m  the  contract.    If  it  is  to  be  exercised  because  deemed  for 

1  Mechanics  Bk.  v.  New  York,  supra. 

2  Johnson  v.  New  York,  191  N.  Y.  App.  Div.  205. 

»  Wells  Bros.  Co.  v.  U.  S.,  254  U.  S.  83,  65  L.  Ed. . 

*  U.  S.  V.  McMullen,  222  U.  S.  460,  56  L.  Ed.  269. 

6  Harder  v.  Marion  County,  97  Ind.  455;  Mechanics  Bk.  t;.  New  York,  164 
N.  Y.  App.  Div.  128. 

256 


CHAP.  XXIII  ]      STIPULATIONS   OF  THE   CONTRACT  [  §  162 

the  best  interest  of  the  pubHc  body  it  cannot  be  exercised 
arbitrarily  or  unreasonably.^  If  its  exercise  must  be  upon 
stated  notice,  the  giving  of  the  notice  is  a  condition  precedent 
to  a  vaUd  exercise  of  the  reservation.-  Of  course  if  not  other- 
wise provided  the  notice  must  be  personal  ^  and  must  usually 
be  in  writing.'*  Where  this  reserved  right  to  annul  is  exer- 
cised, the  contractor,  whose  contract  is  thus  annulled,  is  en- 
titled to  recover  from  the  public  body  the  value  of  the 
actual  benefits  which  it  has  received  from  the  partial  perform- 
ance.^ In  the  absence  of  evidence  to  the  contrary  its  ac- 
tion in  annulUng  will  be  presumed  to  be  in  good  faith. ^ 
The  action  may  not  be  for  money  due  on  the  contract, 
where  the  action  in  revoking  is  improper  or  unauthorized, 
but  must  be  for  damages  for  breach  of  the  contract.^ 

1  Powers  V.  Yonkers,  114  N.  Y.  145,  21  N.  E.  132;  Wakefield  Cona.  Co.  v. 
New  York,  157  N.  Y.  App.  Div.  535,  213  N.  Y.  633,  107  N.  E.  1087;  Smith 
Cont.  Co.  V.  New  York,  167  N.  Y.  App.  Div.  253;  Johnson  v.  New  York,  191 
N.  Y.  App.  Div.  205;  Newport  v.  Phillips,  19  Ky.  L.  R.  352,  40  S.  W.  378. 

2  Indianapolis  v.  Bly,  39  Ind.  373. 

3  Haldane  v.  U.  S.,  69  Fed.  819. 

*  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101. 
5  Lyman  v.  Lincoln,  38  Neb.  794,  57  N.  W.  531. 
«  Powers  V.  Yonkers,  supra;  Newport  v.  Philhps,  supra. 
'  Newport  v.  PhiUips,  supra. 


257 


CHAPTER  XXIV 

MODIFICATION   OF    CONTRACT 

§  163.  Right  to  Modify. 

A  public  body  has  no  right  to  make  changes  or  demand 
that  changes  be  made  or  allowed  in  a  contract  unless  the 
contract  expressly  provides  for  such  modification.^  Of 
course  any  contract  may  be  modified  by  the  mutual 
consent  of  the  parties  ^  and  where  the  contract  itself 
provides  that  the  public  body  may  make  modifications 
and  may  require  the  contractor  to  assent  thereto,  such 
right  exists.  3  But  the  modification  or  change  can  only 
be  made  by  authorized  officials  of  the  public  body,  to  be 
enforceable.'^  But  the  exercise  of  such  a  right  will  not  be 
extended  so  as  to  allow  the  making  of  radical  changes  or 
such  as  materially  alter  the  character  of  the  work  ^  with- 

1  Roettingerv.U.  S.,  26  Ct.  CI.  391;  Griffiths  v.  Chicago  San.  Dist.,  174  III. 
App  100;  Nat.  Cont.  Co.  v.  Hudson  River  W.  P.  Co.,  192  N.  Y.  209,  84  N.  E. 
965;  McMaster  v.  State,  108  N.  Y.  542,  15  N.  E.  417. 

2  Bradley  v.  McDonald,  218  N.  Y.  351,  113  N.  E.  340;  Smith  v.  Parkersburg 
Bd.  of  Ed.',  76  W.  Va.  239,  85  S.  E.  513;  Stephens  v.  Essex  Co.  Pk.  Commr's, 
143  Fed.  844;  U.  S.  v.  Guerber,  124  Fed.  823. 

»  Smith  V.  Chicago  San.  Dist.,  108  111.  App.  69;  Swift  v.  U.  S.,  14  Ct.  CI.  208; 
Conners  t-.  U.  S.,  141  Fed.  16. 

*  Bonesteel  v.  Mayor,  22  N.  Y.  162;  Becker  i-.  New  York,  176  N.  Y.  441, 
68  N.  E.  855;  Hague  v.  Philadelphia,  48  Pa.  St.  527;  Mott  v.  Utica,  114  N.  Y. 
App.  Div.  736;  Markey  v.  Milwaukee,  76  Wis.  349,  45  N.  W.  28;  O'Hara  v. 
New  Orleans,  30  La.  Ann.  152;  Chicago  v.  McKechney,  205  111.  372,  68  N.  E. 
954;  People  ex  rel.  Hanberg  v.  Peyton,  214  III.  416,  73  N.  E.  770;  Lamson  v. 
Marshall,  133  Mich.  250,  95  N.  W.  78;  Campau  v.  Detroit,  106  Mich.  414,  64 
N  W.  336;  Johnson  v.  Albany,  86  N.  Y.  App.  Div.  567;  Terre  Haute  r.  Lake, 
43  Ind.  480;  U.  S.  Elec,  etc.,  Co.  y.  Big  Rapids,  78  Mich.  67,  43  N.  W.  1030; 
Greenville  v.  Greenville  W.  Wks.,  125  Ala.  625,  27  So.  764;  Maryland  Steel 
Co.  V.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312;  Plumley  v.  U.  S.,  226  U.  S.  545; 
Smith  V.  Salt  Lake  Citv,  83  Fed.  784. 

5  Allen  Co.  v.  Silvers,  22  Ind.  491;  Ely  v.  Grand  Rapids,  84  Mich.  336,  47  N. 

258 


CHAP.  XXIV  ]         MODIFICATION   OF   CONTRACT  [  §  164 

out  compensation  ^  or  so  as  to  deprive  the  contract  of 
mutuality,  but  the  reserved  right  to  make  changes  in 
details,  with  increase  in  compensation  to  meet  the  changes 
does  not  deprive  the  contract  of  the  element  of  mutuality. ^ 
Nor  will  the  right  be  extended  beyond  the  particular 
purposes  set  out  in  the  contract.^  So  the  right  to  stop 
the  work  will  not  arise  from  a  reserved  power  to  make 
certain  changes,^ 

§  164.  Power  to  Modify. 

No  absolute  power  exists  in  public  bodies  to  modify  or 
change  public  contracts  at  the  mere  will  of  the  body. 
Such  contracts  can  be  modified  or  changed  only  upon  the 
same   conditions   as   are   imposed  upon   natural   persons.^ 

But  public  bodies,  from  the  fact  that  they  possess  the 
power  to  contract,  have  also  the  power  to  modify  or 
change  contracts  the  same  as  natural  persons  in  the 
absence  of  statutory  restriction.^ 

W.  447;  Dolandv.  Clark,  143  Cal.  176,  76Pac.  958;  Detroit  v.  Mich.  Pav.  Co., 
36  Mich.  335;  Reno  W.,  etc.,  Co.  v.  Osburn,  25  Nev.  53,  56Pac.  945;  Laver  v. 
EUert,  110  Cal.  221,  42  Pac.  806;  McCartan  i-.  Trenton,  57  N.  J.  Eq.  571,  41 
Atl.  830;  Lutes  v.  Briggs,  64  N.  Y,  404;  Filbert  v.  Philadelphia,  181  Pa.  St. 
530,  37  Atl.  545. 

1  McMaster  v.  State,  supra. 

2  U.  S.  V.  McMullen,  222  U.  S.  460,  472,  56  L.  Ed.  269. 
^  Nat.  Con.  Co.  v.  Hudson  R.  P.  Co.,  supra. 

*  Clark  V.  New  York,  4  N.  Y.  338,  53  Am.  Dec.  379. 

5  Von  Schmidt  v.  Widber,  105  Cal.  151,  38  Pac.  682;  Quincy  v.  Bull,  106 
111.  337;  Vincennes  v.  Citizens G.  L.  Co.,  132  Ind.  114,  31  N.  E.  573,  16  L.  R.  A. 
485;  Indianapolis  v.  IndianapoUs  G.  L.  Co.,  66  Ind.  396;  State  v.  Heath,  20 
La.  Ann.  172;  Davenport  Gas  L.  Co.  v.  Davenport,  13  Iowa,  229;  Hudson  E. 
L.  Co.  V.  Hudson,  163  Mass.  346,  40  N.  E.  109;  Dausch  v.  Crane,  109  Mo.  323, 
19  S.  W.  61;  Nebraska  City  v.  Nebraska  C.  H.  G.  L.  Co.,  9  Neb.  339,  3  N.  W. 
870;  Taylor  v.  Lambertville,  43  N.  J.  Eq.  107,  10  Atl.  809;  Crebs  v.  Lebanon,  98 
Fed.  549;  Galveston  v.  Morton,  58  Tex.  409;  Western  Sav.  Fund  Soc.  v. 
Philadelphia,  31  Pa.  St.  175. 

e  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312;  Meech  v.  Buffalo, 
29  N.  Y.  198;  Moore  v.  Albany,  98  N.  Y.  396;  Voght  v.  Buffalo,  133  N.  Y. 
463,  31  N.  E.  340;  Weston  v.  Syracuse,  158  N.  Y.  274,  53  N.  E.  12;  Fitzgerald 
V.  Walker,  55  Ark.  148,  17  S.  W.  702;  Doland  v.  Clark,  143  Cal.  176,  76  Pac. 

259 


§  164  ]  CREATION  OF  THE  CONTRACT  [PART  H 

If  a  public  contract,  because  of  changed  circumstances 
or  through  some  mistake  becomes  oppressive,  it  is  within 
the  power  of  the  pubHc  body  to  modify  it  and  allow 
additional  compensation,  or  it  may  annul  it.^ 

A  modification  of  a  contract  or  a  waiver  of  conditions 
in  a  contract  found  to  be  prejudicial  to  its  interests  can 
be  made  by  a  municipal  corporation  or  other  public 
body  by  imphcation.^  But  they  may  not  waive  or 
change  the  requirement  that  the  cost  shall  be  within 
the  appropriation,  for  this  is  a  statutory,  not  a  contract 
condition.^ 

§  165.  Consideration  for  Modification. 

A  wide  divergence  of  opinion  exists  upon  the  question  as 
to  whether  a  new  consideration  is  needed  to  support  the 
modification  or  change  of  an  existing  contract.  Some  take 
the  view  that  a  modification  creates  a  new  agreement  and 
therefore  the  new  agreement  needs  a  consideration  to 
support  it.'*  Others  support  the  modified  agreement  upon 
the  original  consideration.^  Still  others  assert  that 
parties  may  by  mutual  agreement  change  or  modify  a 
contract  without  a  new  consideration,   that  a  new  con- 

958;  Shea  v.  Milford,  145  Mass.  528,  14  N.  E.  769;  FUbert  v.  Philadelphia,  181 
Pa.  St.  530,  37  Atl.  545. 

1  Meech  v.  Buffalo,  29  N.  Y.  198;  Bean  v.  Jay,  23  Me.  117,  121.  But  where 
there  is  constitutional  restraint  upon  legislative  awards  to  contractors  and 
others  and  the  Legislature  is  prohibited  from  recognizing  claims  founded  on 
gratitude  and  charity  it  may  not  award  extra  compensation  to  a  contractor. 
N.  Y.  Laws  1919,  Chap.  459,  declared  invalid,  Gordon  v.  State,  233  N.  Y.  1 
See  Chap.  586,  Laws  of  New  York,  1918. 

2  Messenger  v.  Buffalo,  21  N.  Y.  199;  Randolph  County  v.  Post,  93  U.  S. 
502,  23  L.  Ed.  9.57;  Newport  News  v.  Potter,  122  Fed.  332. 

3  Lord  V.  New  York,  171  N.  Y.  App.  Div.  140;  Bernstein  v.  New  York  No.  2, 
143  Id.  543,  545;  People  v.  Clarke,  79  N.  Y.  App.  Div.  78. 

« Wright  V.  Tacoma,  87  \Va.sh.  334,  151  Pac.  8.37. 

"Ft.  Madison  v.  Moore,  109  Iowa,  476,  80  N.  W.  527;  Dyer  v.  Middle 
Kittitas  I.  Dist.,  25  Wash.  80,  64  Pac.  1009;  Long  v.  Pierce  County,  22  Wash. 
330,  61  Pac.  142;  U.  S.  v.  Cooke,  207  Fed.  682. 

260 


CHAP.  XXIV  ]         MODIFICATION   OF   CONTRACT  [  §  165 

sideration  is  not  needed.  ^  But  it  is  claimed  that  where 
the  original  contract  does  not  contemplate  a  supplemental 
agreement,  the  original  consideration  will  not  support 
such  an  agreement,  and  the  supplemental  or  modified 
agreement  is  void  for  want  of  any  other  consideration  to 
support  it,-  though  it  is  said  consideration  may  be  found 
in  the  mutual  assent  of  the  parties.^  Again,  it  is  said  new 
consideration  may  be  found  in  the  acceptance  and  substi- 
tution of  the  new  contract  for  the  old.^  Again,  the  con- 
sideration is  rested  on  waiver.  Where  for  instance  a 
contractor  threatens  to  breach  his  contract  unless  he  be 
given  additional  compensation,  and  additional  compensa- 
tion is  promised  him,  the  consideration  to  support  the 
new  promise  is  based  upon  the  proposition  that  since  the 
contractor  had  the  right  to  abandon  his  contract  and 
leave  the  public  body  to  sue  for  damages,  the  new  promise 
induces  the  contractor  to  waive  the  right  and  so  the  giving 
up  of  the  right  is  the  consideration  which  moves  to  the 
public  body.  While  a  considerable  body  of  respectable 
authority  supports  this  view  it  is  met  by  the  argument 
that  it  cannot  logically  be  said  that  one  has  a  right  to 
break  a  contract,  for  no  one  has  a  right  to  commit  a 
wrong.  But  there  is  plenty  of  authority  to  sustain  this 
right.  A  contractor  can  abandon  his  contract.  It  is 
true  he  must  pay  the  damages.  But  he  has  the  right  to 
say  he  will  pay  such  rather  than  go  on  with  the  contract. 
Having  this  right  and  about  to  exercise  it,  if  it  be  more 
profitable  for  the  public,   rather  than  sue  and  be  com- 

1  Shriner  v.  Craft,  166  Ala.  146,  51  So.  884,  28  L.  R.  A.  n.  s.  450;  Dickey  v. 
Vaughn,  198  Ala.  283,  73  So.  507;  Straw  v.  Temple,  48  Utah,  258,  159  Pac. 
44. 

2  State  V.  Sapulpa,  58  Okla.  550,  160  Pac.  489. 
'  Idem. 

*  Harrod  v.  State,  24  Ind.  App.  159,  55  N.  E.  242;  Rowe  v.  Peabody,  207 
Mass.  226,  93  N.  E.  604. 

261 


§  165  ]  CREATION   OF  THE   CONTRACT  [  PART  II 

pelled  to  relet  the  contract,  to  choose  to  pay  more  to 
induce  the  contractor  to  go  on,  the  promise  is  binding. 
It  is  not  favoring  the  man  who  goes  back  on  his  bargain 
and  who  attempts  to  hold  up  the  public  body  for  more 
money  to  do  the  same  work  for  which  he  already  is  under 
obligation,  since  the  public  body  are  not  bound  to  submit, 
but  are  free  to  let  the  contractor  go  and  sue  him  on  his 
contract.  But  with  modem  methods  of  bonds  to  com- 
plete, the  pubUc  simply  call  on  the   bondsmen  to  finish.^ 

§  166.  Parol  Modification  of  Written  Contract. 

A  written  contract  may  be  modified  by  a  subsequent 
parol  agreement  unless  a  writing  is  required  by  statute.^ 

\Miile  contracts  sometimes  provide  that  they  can  only 
be  modified  in  a  particular  way  or  method,  oral  modifica- 
tions are  nevertheless  sustained.^  A  contract  required  by 
law  to  be  in  writing  may  be  modified  by  an  oral  agree- 
ment, and  where  a  vessel  was  delivered,  approved  and  paid 
for,  without  protest  on  account  of  delay  and  the  quarter- 
master general  had  waived  orally  the  time  limit  in  the 
contract,  such  oral  agreement  was  within  the  scope  of  his 
official  authority  and  amounted  to  a  modification  of  the 
contract.*  This  is  upon  the  theory  that  the  statutory 
requirement  being  for  the  benefit  of  the  government  may 
be  waived  by  it.  But  there  is  authority  that  where  the 
contract  is  required  by  law  to  be  in  writing  an  oral  mod- 
ification  is   invalid.^     Ordinarily  a  modification  may  be 

iSee  Bd.  of  County  Comm.  t.  Cincinnati  S.  H.  Co.,  128  Ind.  240,  27  N.  E. 
612;  Finucane  Co.  v.  Rochester  Bd.  of  Educ,  190  N.  Y.  76,  82  N.  E.  737; 
Bradley  v.  McDonald,  218  N.  Y.  351,  113  N.  E.  340. 

2  New  York  v.  Butler,  1  Barb.  325;  Contra,  Chambers  t;.  Cameron  Bd.  of 
Ed.,  60  Mo.  370,  379. 

3  Ritchie  v.  State,  39  Wash.  95,  81  Pac.  79. 

*  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312. 
»  McManus  v.  Philadelphia,  201  Pa.  St.  619,  51  Atl.  322. 

262 


CHAP.  XXIV  ]         MODIFICATION    OF   CONTRACT  [  §  167 

implied  from  acts  of  the  parties.  ^  If  a  statute  requires  the 
contract  to  be  in  writing,  all  alterations  must  be  in  writing, 
and  where  the  contract  itself  requires  changes  to  be  in 
writing,  oral  modifications  are  invalid.^  The  question 
whether  there  has  been  a  modification  is  usually  a  question 
of  fact  to  be  decided  by  a  jury  from  the  particular  facts 
and  circumstances  of  each  case.^ 

§  167.  Effect  of  Modification. 

Where  the  agreement  is  modified,  the  new  agreement 
takes  the  place  of  the  old  one.''  Where  work  is  being 
performed,  for  instance,  under  one  contract  and  the  parties 
thereto  enter  into  a  second  contract  modifying  the  first 
and  extending  the  contract  period,  the  work  thereafter  is 
performed  under  the  first  contract  as  modified  by  the 
second,  and  the  contractor  is  not  chargeable  with  the  cost 
of  inspection  nor  for  liquidated  damages  during  the 
extended  period  in  accordance  with  a  provision  of  the  first 
contract  before  modification.^  But  the  new  contract 
must  be  valid,  and  where  the  attempt  to  modify  results 
in  an  illegal  agreement  the  prior  contract  still  subsists  and 
is  not  affected  by  the  effort  to  change.^  Where  a  con- 
tract is  changed  in  many  particulars,  with  the  acquiescence 

1  Messenger  v.  Buffalo,  21  N.  Y.  196;  Newport  News  Co.  v.  Potter,  122 
Fed.  321;  Taylor  v.  LambertviUe,  43  N.  J.  Eq.  107,  10  Atl.  809;  Buncombe  v. 
Ft.  Dodge,  38  Iowa,  281. 

2Terre  Haute  v.  Lake,  43  Ind.  480;  State  v.  Cowgill,  etc.,  M.  Co.,  156  Mo. 
620;  Malonet^.  Philadelphia,  147  Pa.  St.  416,  23  Atl.  628;  Hawkins  v.  U.  S.,  96 
U.  S.  689,  24  L.  Ed.  607,  aff'g  12  Ct.  CI.  181;  Ferris  v.  U.  S.,  28  Ct.  CI.  332; 
McLaughhn  v.  U.  S.  36  Ct.  CI.  138;  Dougherty  v.  Norwood  Boro.,  196  Pa. 
St.  92,  46  Atl.  384;  Johnson  v.  Albany,  86  N.  Y.  App.  Div.  567;  North  Pacific 
L.  &  M.  Co.  V.  East  Portland,  14  Oreg.  3,  12  Pac.  4. 

3  Cook  County  v.  Harms,  108  III.  151. 

*  Hayden  v.  Astoria,  74  Oreg.  525,  145  Pac.  1072;  Brabazon  v.  SejTnour,  42 
Conn.  551. 

6  Germann  v.  United  States,  50  Ct.  CI.  175. 

« Scott  V.  Atchison,  38  Tex.  384. 

263 


§  167  ]  CREATION  OF  THE  CONTRACT  [  PART  11 

of  the  parties,  the  original  contract  is  abrogated.^  Where 
the  work  is  deviated  from  in  material  matters  so  that  the 
work  is  not  reasonably  to  be  recognized  as  the  original 
contract,  the  latter  is  considered  as  abandoned.-^ 

Whether  a  contract  is  modified  or  abrogated,  when  it 
was  discovered  that  the  work  planned  would  be  useless, 
is  a  question  for  the  jury.^  But  slight  changes  made  with 
the  acquiescence  of  the  parties  will  not  abrogate  the 
obHgations  of  the  parties,  but  the  original  contract  will 
continue  to  be  in  effect  as  modified.* 

WTiere  the  public  body  was  responsible  for  damages 
resulting  from  the  leakage  of  a  coffer  dam,  its  responsibility 
endures  although  the  leakage  continued  during  an  exten- 
sion of  the  contract  time  obtained  at  the  request  of  the 
contractor.^ 

Where  certain  of  the  specifications  in  a  school  contract 
as  to  material  to  be  used  for  the  finish  of  the  floors  were 
waived  at  the  request  of  the  contractor,  and  because  of 
the  change  the  cost  to  the  contractor  was  reduced,  the 
public  body  were  not  entitled  to  a  reduction  of  the  con- 
tract price  nor  to  a  counterclaim  to  the  amount  of  such 
expenses.^ 

1  Hayden  v.  Astoria,  74  Oreg.  525,  145  Pac.  1072. 

2  Corson  V.  Dawson,  129  Minn.  453,  152  N.  W.  842. 
»  Mather  v.  Butler  County,  28  Iowa,  253. 

*  Cook  Co.  V.  Harms,  101  111.  App.  24;  Gibbs  v.  Girardville  Sch.  Dist.,  195 
Pa.  St.  396,  46  Atl.  91;  ColUns  v.  U.  S.,  34  Ct.  CI.  294. 

B  Collins  V.  U.  S.,  34  Ct.  CI.  294. 

8  Finucane  Co.  v.  Rochester  Bd.  of  Educ,  190  N.  Y.  76,  82  N.  E.  737.  See 
Kingsley  v.  Brooklyn,  78  N.  Y.  200. 


264 


PART  III.    CONSTRUCTION  AND  OPERATION 
OF  CONTRACT 

CHAPTER  XXV 

GENERAL   RULES 

§  168.  Construction  and  Operation — General  Observations. 

While  some  of  the  courts  have  taken  the  pains  to  an- 
nounce that  public  contracts  are  to  be  construed  hberally 
in  favor  of  the  public,  there  is  no  justice  in  such  an  atti- 
tude, nor  is  there  any  occasion  for  thus  attempting  to 
make  the  various  villages,  towns,  cities  and  counties,  the 
State  and  the  Nation,  the  wards  of  the  court.  As  a  mat- 
ter of  fact  probably  no  contracting  parties  protect  them- 
selves more  thoroughly  and  completely  than  these  various 
public  corporations.  The  contracts  which  they  present 
to  the  contractor  are  ironclad,  unvarying  documents 
fortified  and  strengthened  over  a  period  of  years  to  meet 
the  last  and  every  prior  adverse  decision  from  the  courts. 
They  are  so  fashioned  in  language  and  form,  many  of 
them,  that  none  of  the  ordinary  presumptions  of  contract 
law  may  be  indulged  in  the  case  of  public  contracts.^ 
Where  individuals  or  private  corporations  contract,  the 
form  and  substance  of  the  contract  is  a  matter  of  de- 
liberation and  discussion  on  both  sides,  and  when  com- 
pleted is  a  mutual  document.  In  the  case  of  public  con- 
tracts there  is  no  opportunity  for  give  and  take,  for  usual 
bargaining,  the  contractor  must  take  what  is  presented  to 
» State  V.  Sapulpa,  58  Okla.  550,  160  Pac.  489. 

265 


§168]       contract:  construction,  operation    [  part  hi 

him.  For  these  well-known  reasons  which  are  matter  of 
common  observation  and  knowledge,  there  is  no  occasion 
for  the  courts  to  take  such  a  paternal  attitude  in  behalf  of 
those  who  so  capably  take  care  of  themselves  and  whose 
officials  do,  and  must,  under  the  scrutiny  of  modern 
watchful  public  opinion,  take  close  care  of  the  public 
interests  in  all  contracts  which  are  made.  One  other 
observation  might  pertinently  be  made  and  that  is  that 
public  bodies  in  general  in  all  of  their  larger  public  opera- 
tions are  deahng  with  the  strongest  personalities  in  the 
contracting  world.  Men  of  real  genius  are  at  the  head  of 
wonderful  organizations  of  skillful  men  which  are  kept 
together  over  a  long  period  of  years.  They  become  effi- 
cient to  the  point  of  closest  contact  with  perfection. 
They  are  financially  strong  and  fully  capable  of  meeting 
their  obligations,  and  take  a  real  pride  in  doing  their 
work  honestly  and  well  and  look  with  as  much  honest 
pride  upon  the  tunnels,  subways,  bridges,  buildings  and 
various  structures  and  works  they  have  builded,  as  their 
masterpieces,  the  same  as  a  sculptor  or  painter  would  look 
upon  the  product  of  his  art  or  a  judge  would  view  his 
most  masterly  and  rounded  opinion. 

Public  work  costs  less  than  private  work,  the  bidders 
taking  less  profit,  because  of  the  assured  solvency  of  the 
public  body.  In  countless  instances  the  work  has  been 
done  for  less  than  cost.  Public  officials  and  public  con- 
tractors are  honorable  and  upright  in  their  conduct  in  the 
making  of  contracts  and  the  carrying  out  of  the  work. 
Cases  where  fraud  and  corruption  arise  are  very  excep- 
tional. 

§  169.  Rules  Should  be  Universal. 

Rules  of   interpretation  of  public   contracts  should   be 

266 


CHAP.  XXV  ]  GENERAL  RULES  [  §  169 

universal  in  their  application.    They  are  founded  in  reason 
and  sound  conunon  sense,  and  have  as  their  touchstone 
the  ascertainment  of  the  intention  of  the  parties.     The 
moment  courts,  in  their  effort  to  be  subtle  or  to  work  out 
what  they  think  is  just  in  a  given  case,  depart  from  this 
standard  they  make  a  new  contract  for  the  parties,  wrong 
their  language  and  destroy  the  universality  of  the  law  by 
making    it    individual.      So    many    cases    arise    in   which 
individual  treatment  is  accorded  that  after  a  while  the 
rule  involved  in  a  given  case  is  lost  in  a  maze  of  unreal 
exceptions,  which  are  invented  to  fit  hard  cases,  or  cases 
that  may  not   even   be   properly  so  called,  but  in  which 
the  judge  does  violence  to  the  contract  and  its  language 
to  work  out  what  he  thinks  is  just.    There  are  and  should 
be  real  exceptions;  there  is  a  tendency  to  abolish  technical- 
ities and  it  should  be  extended;  there  is  a  modern  attitude 
of  injecting  equitable  principles  into  the  construction  and 
interpretation  of  contracts  and  it  should  be  encouraged, 
but  there  is  also  a  language  which  is  the  only  vehicle  of 
expression  capable  of  use  in  forming  contracts  and  there  is 
an  intent  which  is  the  soul  of  language  which  animates 
and  illumines  it,  and  the  ascertainment  of  this  should  be 
the  single  aim  of  the  courts.     To  reach  it,  it  is  not  neces- 
sary to  do  violence  to  language,  common  sense  or  common 
understanding,  and  when  found  it  should  be  proclaimed 
and  enforced.     Such  action  will  tend  toward  surer  results, 
greater    respect    for    the    obligation    of    contracts,    firmer 
assurance  that  contracts  as  written  and  intended  will  be 
enforced.    Neither  party  will  then  be  deprived  of  the  just 
fruits  or  reward  of  honest  effort  spent  or  money  expended 
in  reliance  upon  a  common  understanding  of  his  contract. 
And    the    law    of    contracts    will    thereby    become    more 
scientific  and  stable. 

267 


§170]       contract:  construction,  operation    [  part  hi 

§  170.  General  Rules  Affecting  Public  Contracts. 

It  is  fundamental  that  the  prunaiy  object  of  construc- 
tion in  contract  law  is  to  discover  the  intention  of  the 
parties  and  to  give  it  effect.^  To  do  this,  the  entire 
agreement  is  to  be  considered  as  a  whole,  not  what  each 
part  may  mean,  but  what  the  agi'eement  means  con- 
sidered as  a  whole.-  And  if  possible  the  agreement  should 
be  construed  so  as  to  give  effect  to  each  provision  of  the 
contract.  The  intention  must  not  be  deduced  from 
specific  provisions  or  fragmentaiy  parts.  The  true  func- 
tion of  interpretation  is  to  give  force,  effect  and  meaning 
to  the  words  and  clauses  used  in  an  instrument  so  as  best 
to  effectuate  and  carry  into  operation  the  reasonable 
intention  of  the  parties.^  In  determining  the  meaning  to 
be  accorded  to  doubtful  language,  a  construction  should 
be  given,  if  this  can  fairly  be  done,  that  will  support 
rather  than  defeat  the  instrument.^  The  construction 
should  not  be  strained  in  favor  of,  but  most  strongly  against, 
the  person  undertaking  or  entering  into  the  obligation.^ 
Public  contracts  must  be  construed  in  the  light  of  the 
facts  surrounding  the  parties  at  the  time  of  entering  into 
or  making  the  agreement.  Courts  should  consider  the 
occasion  which  gave  rise  to  the  contract,  the  relation  of 

1  Akinr.  U.  S.,  17  Ct.  CI.  260;  U.  S.  v.  Bethlehem  Steel  Co.,  205  U.  S.  105,  51 
L.  Ed.  731;  Gt.  Nor.  Ry.  Co.  v.  U.  S-  236  Fed.  433;  U.  S.  F.  &  G..Co.  v.  Bd. 
of  Comm'rs  of  Woodson  County,  145  Fed.  144;  Turner  v.  Fremont,  159  Fed. 
221,  170  Fed.  259;  Loeb  v.  Montgomery,  184  Ala.  217,  61  So.  642;  St.  Louis 
V.  St.  Louis  &  San  Francisco  R.  Co.,  228  Mo.  712,  129  S.  W.  691;  Sterling  v. 
Hurd,  44  Colo.  436,  98  Pac.  174;  Parker-Washington  Co.  v.  Chicago,  267 
111.  136,  107  N.  E.  872. 

2  U.  S.  F.  &  G.  Co.  V.  Bd.  of  Comm'rs  of  Woodson  County,  145  Fed.  144; 
Loeb  V.  Montgomery,  supra;  St.  Louis  v.  St.  Louis  &  S.  F.  R.  Co.,  supra. 

'  Turner  v.  Fremont,  159  Fed.  221;  Loeb  v.  Montgomery,  supra;  U.  S.  F.  & 
G.  Co.  V.  Bd.  of  Comm'rs,  supra;  Merrill-Ruckgaber  Co.  v.  U.  S.,  49  Ct.  CI. 
553,  aff'd  241  U.  S.  387,  00  L.  Ed.  1058. 

*  Loeb  V.  Montgomery,  supra. 

'  Loeb  V.  Montgomery,  supra. 

268 


CHAP.  XXV  ]  GENERAL   RULES  [  §  170 

the  parties  and  the  object  to  be  accompHshed,  ^  Words 
should  not  be  given  a  strained  construction,  but  a  reason- 
able one.  A  reasonable  meaning  of  the  words  employed 
should  by  impUcation  be  read  into  the  contract  in  order 
to  attain  a  just  result,  one  inherent  in  the  very  nature  of 
the  transaction. 2  If  there  is  a  latent  ambiguity  in  the 
contract  then  what  the  parties  do  under  it  is  of  value  in 
interpreting  it.  A  practical  construction  put  upon  an 
agreement  by  the  parties  is  an  interpretation  of  their 
obscurely  expressed  ideas  by  their  acts,  allowing  what 
they  do  to  exemplify  and  disclose  the  intent  underlying 
what  they  say.^  Known,  established  and  general  usage 
and  custom  may  be  read  into  a  contract  to  get  at  the 
meaning  of  its  language  when  a  doubt  in  regard  to  that 
meaning  fairly  arises  on  the  whole  instrument.*  Acquies- 
cence in  regulations  of  departments  for  a  long  time  will 
not  be  disregarded,  without  most  cogent  and  persuasive 
reasons.^  All  of  these  aids  to  interpretation,  however,  fill 
no  office  and  have  no  place  at  all  when  a  contract  is 
plain,  unequivocal  and  free  from  ambiguity.  Interpreta- 
tion cannot  control  expression  when  it  is  clear  and  there  is 
nothing  to  be  construed.  In  such  case,  construction  and 
interpretations  by  implication,  or  reading  provisions  in  or 
out  are  not  allowed.  Implication  cannot  control  express 
language.  Expressum  facit  cessare  tacitum.^  These  aids 
to    interpretation    and    understanding    should    never    be 

^  Loeb  V.  Montgomery,  supra;  Chicago  Flour  Co.  v.  Chicago,  243  HI.  268, 
90  N.  E.  674;  Jackson  Co.  L.  H.  &  P.  Co.  v.  Independence,  188  Mo.  App.  157, 
175  S.  W.  86. 

2  St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co.,  supra. 

'  Idem. 

*  Idem. 

6  Gt.  Nor.  Ry.  Co.  v.  U.  S.,  236  Fed.  433;  U.  S.  v.  Atlantic  Coast  Line  R. 
Co.,  206  Fed.  199. 

« St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co.,  supra;  Salt  Lake  City  v.  Smith,  104 
Fed.  457. 

269 


§170]       contract:  construction,  operation    [  part  hi 

pressed  so  far  as  to  make  in  effect  a  new  contract  for  the 
parties  by  adding  \dtal  and  burdensome  terms  by  implica- 
tion.^ It  seems  to  be  the  settled  policy  of  our  law  that 
contracts  between  private  persons  and  mimicipalities  shall 
be  in  wTiting.  Such  poUcy  will  have  little  effect  to  produce 
wholesome  results  if  the  obligations  assumed  by  the  parties 
are  to  be  enlarged  by  implication.^  The  law  permits 
parties  competent  to  contract  and  free  to  do  so,  in  the 
exercise  of  their  judgment,  to  make  their  own  contracts, 
and  the  proper  function  of  courts  is  to  enforce  such  con- 
tracts as  made,  where  they  do  not  conflict  with  any  rule 
of  law  or  good  morals,  or  the  declared  public  policy  of  the 
State  or  Nation.^  When  the  intention  of  the  parties  is 
ascertained,  it  is  ordinarily  the  duty  of  courts  to  give  it 
effect.  They  have  no  function  or  right  to  assume  a 
guardianship  over  those  who  have  the  requisite  capacity  to 
contract  and  are  free  to  make  such  contracts  as  they 
choose.^  The  actual  intent  of  the  parties  when  ascer- 
tained must  prevail  over  dry  words,  inapt  expressions  and 
careless  recitations  in  the  contract,  unless  that  intention  is 
plainly  contrary  to  the  plain  sense  of  the  binding  words  of 
the  instrmnent.^  A  construction  which  sustains  and 
vitalizes  an  agreement  should  be  preferred  to  that  which 
strikes  dowTi  and  paralyzes  it.  It  should  be  construed  so 
as  to  prevent  its  failure,  and  to  give  effect  to  the  obligation 
of  each  party  appearing  upon  it  at  the  moment  the  con- 
tract itself  takes  effect — ut  res  magis  valeat  quam  pereat.^ 

1  St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co.,  supra. 

^  Idem. 

3  Parker  Washington  Co.  v.  Chicago,  267  III.  136,  107  N.  E.  872;  Pacific 
Hdw.  Co.  V.  U.  S.,  49  Ct.  CI.  327. 

*  Parker  Washington  Co.  v.  Chicago,  267  111.  136,  107  N.  E.  872. 

5  U.  S.  F.  &  G.  Co.  V.  Bd.  of  Comm'rs,  supra;  Salt  Lake  City  v.  Smith,  104 
Fed.  4.57. 

«  U.  S.  F.  &  G.  Co.  V.  Bd.  of  Comm'rs,  supra. 

270 


CHAP.  XXV  ]  GENERAL   RULES  [  §  170 

Words  are  to  be  construed  in  the  sense  in  which  the 
parties  to  the  agreement  used  them  when  they  agreed  to 
them.^  Lapse  of  time  cannot  change  the  substance  of 
agreement. 2  The  contract  is  always  to  be  interpreted 
according  to  its  true  intent,  although  altered  conditions 
may  vary  the  form  of  fulfillment.^  Words  should  be 
construed  as  known  to  be  understood  by  the  party  for 
whose  benefit  they  are  used.^  When  there  is  doubt  as  to 
the  meaning  of  a  contract,  a  party  will  be  held  to  that 
meaning  which  he  knew  the  other  party  supposed  the 
words  to  bear.^  A  construction  given  to  a  contract  by 
the  express  declaration  of  one  party  and  the  silent  acquies- 
cence of  the  other,  prior  to  and  during  its  performance, 
cannot  be  repudiated  after  a  party  has  acted  upon  the 
faith  of  it.^  If  there  is  a  repugnancy  between  general 
clauses  and  more  detailed,  specific  clauses,  the  latter  will 
govern.  This  rule,  like  other  rules  of  construction,  is  a 
mere  aid  to  ascertain  the  intention  of  the  parties,  which  is 
to  be  gathered  from  the  whole  instrument.^  A  reasonable 
construction  put  upon  a  doubtful  contract  by  the  parties, 
consonant  with  its  language  and  followed  for  a  long  time, 
will  be  adopted.^  No  part  of  a  contract  will  be  rejected 
unless  it  is  necessary  so  to  do  in  order  to  prevent  a  defeat 


1  Salt  Lake  City  v.  Smith,  104  Fed.  457. 

2  Los  Angeles  City  Water  Co.  v.  Los  Angeles,  88  Fed.  720;  Davin  v.  Syracuse, 
69  Misc.  285,  145  N.  Y.  App.  Div.  904. 

» Virginia  v.  West  Virginia,  238  U.  S.  202,  236,  59  L.  Ed.  1272. 
*  People  ex  rel.  McDonough  v.  Bd.  of  Managers,   96  N.  Y.  640;  Clinton 
County  V.  Ramsey,  20  111.  App.  577. 

6  Scully  V.  U.  S.,  197  Fed.  327;  Bowers  Hydr.  Dredg.  Co.  v.  U.  S.,  211  U.  S. 
176,  188,  53  L.  Ed.  136,  aff'g  41  Ct.  CI.  214. 

« Scully  V.  U.  S.,  197  Fed.  327. 

7  English  V.  Shelby,  116  Ark.  212,  172  S.  W.  817. 

8  Covington  v.  So.  Covington  &  C.  S.  R.  Co.,  147  Ky.  326,  144  S. 
W.  17;  McLean  County  Coal  Co.  v.  Bloomington,  234  111.  90,  84  N. 
E.  624. 

271 


§170]       contract:  construction,  operation    [  part  hi 

of  the  purposes  sought  by  the  parties  to  the  contract.^ 
The  entire  instrument,  whether  on  one  piece  of  paper  or  on 
several,  and  all  writings  on  the  same  subject  when  referred 
to  and  made  a  part  of  the  contract,  should  be  considered 
in  interpreting  each  part.-  Words  should  be  given  their 
ordinary  and  generally  accepted  meaning  and  under- 
standing.^ When  a  written  contract  is  silent  in  regard  to 
a  matter,  it  is  not  to  be  lightly  presumed  that  it  was 
intended  to  imply  an  agreement  upon  that  point,  unless 
such  implication  clearly  appears  from  the  whole  instru- 
ment. Courts  must  be  careful  not  to  make  it  speak 
where  it  was  intentionally  silent,  or  to  extend  it  beyond 
what  was  intended  by  the  parties.^ 

§  171.  Ambiguity. 

When  there  is  ambiguity  in  a  contract,  it  becomes  open 
to  interpretation  by  aid  of  extrinsic  evidence,  so  as  to  give 
effect  to  the  mutual  intention  of  the  parties.  Whether  an 
instrument  is  ambiguous  or  plain  is  a  matter  of  impression 
rather  than  definition,  because  every  provision  of  the 
contract  may  be  as  clear  as  language  can  make  it,  yet  the 
complete  result  may  be  doubtful  from  lack  of  harmony  in 
its  various  parts.^  But  language  cannot  be  deemed  ambig- 
uous where  its  intent  harmonizes  with  other  provisions  of 
the  contract  and  disagrees  with  none.^  But  if  there  is  no 
ambiguity,  no  provisions  equivocal  in  character,  and  the 

1  Alton  V.  111.  Trans.  Co.,  12  111.  38,  52  Am.  Dec.  479;  McLean  County  Coal 
Co.  V.  Bloomington,  234  111.  90,  84  N.  E.  624. 

2  Sexton  V.  Chicago,  107  111.  323;  McLean  County  Coal  Co.  v.  Bloomington, 
234  111.  90,  84  N.  E.  264. 

'  Tccumseh  v.  Bums,  30  Okla.  503,  120  Pac.  270;  State  v.  Seattle  Elec.  Co., 
71  Wa.sh.  213,  128  Pac.  220. 

*  Ea.st  Ohio  Gas  Co.  v.  Akron,  81  Ohio.  St.  33,  90  N.  E.  40;  Churchyard  v. 
The  Queen,  L.  R.  1  Q.  B.  173,  195;  Pitt  Cons.  Co.  v.  Dayton,  237  Fed.  305. 

5  Butte  Water  Co.  v.  Butte,  48  Mont.  386,  138  Pac.  195. 

«  Day  V.  U.  S.,  48  Ct.  CI.  128. 

272 


CHAP.  XXV  ]  GENERAL  RULES  [  §  172 

result  intended  is  plain,  there  is  no  room  for  construction 
and  the  contract  as  written  must  be  carried  out.^  It  is 
only  where  it  is  indefinite  or  uncertain  in  its  meaning,  or 
there  are  latent  ambiguities  that  parol  proof  is  admissible 
and  proper,  not  to  contradict  or  impeach  the  writing  or 
documentary  and  record  evidence,  but  to  explain  the 
apparent  inconsistencies  and  repugnant  provisions,  and 
thus  give  effect  to  the  writing  as  a  whole.  When  the 
ambiguity  is  patent,  it  cannot  be  cured  by  oral  or  extrinsic 
evidence.^ 

Forfeitures  not  being  favored  in  the  law,  the  provisions 
upon  which  they  are  based  must  be  strictly  construed.' 
They  always  receive  a  strict  construction  against  those  for 
whose  benefit  they  are  introduced.*  Equity  will  relieve 
against  them  when  this  can  be  done  without  doing  violence 
to  the  contracts  of  the  parties,  and  certainly  will  not 
enforce  them  if  they  are  couched  in  ambiguous  language. 

§  172.  What  Law  Governs  Interpretation. 

Public  contracts  are  no  different  from  private  contracts. 
The  obligation  of  each  endures  under  the  law,  and  the 
former  are  governed  by  the  same  canons  of  interpretation 
as  apply  to  contracts  between  natural  persons.^ 

The  law  in  force  at  the  date  of  execution  of  the  contract 

1  St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co.,  228  Mo.  712,  129  S.  W.  691;  Roanoke 
V.  Blair,  107  Va.  639,  60  S.  E.  75. 

2  Mobile  County  v.  Linch,  198  Ala.  57,  73  So.  423;  Douglass  v.  Morrisville, 
89  Vt.  393,  95  Atl.  810. 

'  Mt.  Morris  v.  King,  77  Hun,  18. 

*  Long  V.  Pierce  County,  22  Wash.  330,  61  Pac.  142. 

5  Long  Beach  Sch.  Dist.  v.  Dodge,  135  Cal.  401,  67  Pac.  499;  Sexton  v. 
Chicago,  107  111.  323;  Leavenworth  v.  Rankin,  2  Kan.  357;  Vincennes  v. 
Cits.  G.  L.  Co.,  132  Ind.  114,  31  N.  E.  573,  16  L.  R.  A.  485;  Davies  v.  East 
Saginaw,  66  Mich.  37,  32  N.  W.  919;  Reed  v.  Anoka,  85  Minn.  294,  88  N.  W. 
981;  Horgan  v.  New  York,  160  N.  Y.  516,  55  N.  E.  204;  People  ex  rel.  Graves 
V.  Sohmer,  207  N.  Y.  450,  101  N.  E.  164;  Phelan  v.  New  York,  119  N.  Y.  86, 
23  N.  E.  175;  Skelsey  v.  U.  S.,  23  Ct.  CI.  61;  Harvey  v.  U.  S.,  8  Ct.  CI.  501. 

273 


§  172  ]       contract:  construction,  operation    [  part  iit 

controls  its  interpretation.^  Matters  bearing  upon  the 
execution,  the  interpretation  and  the  vaUdity  of  a  contract 
are  determined  by  the  law  of  the  place  where  the  contract 
is  made.  IMatt^rs  relating  to  its  performance  are  con- 
trolled by  the  law  which  prevails  at  the  place  of  perform- 
ance. Matters  respecting  the  remedy,  the  bringing  of 
suits,  character  of  e\ddence  and  limitation  of  actions  de- 
pend upon  the  law  of  the  forum.^  It  has  been  said,  how- 
ever, that  contracts  are  to  be  construed  liberally  in  favor 
of  the  public  when  their  subject-matter  concerns  the  pub- 
He  interest.^ 

§  173.  Courts  Possess  no  Power  to  Make  New  Contract 
for  Parties. 
The  courts  have  no  power  to  change  or  modify  the 
terms  of  the  contract  which  the  parties  have  made  and 
which  by  law  establishes  their  rights,  duties  and  liabilities. 
They  have  no  right  or  authority  to  make  a  new  contract 
by  construction,^  nor  under  the  guise  of  construction 
impose  conditions  or  obligations  not  expressed  in  or  clearly 
implied  from  the  contract.  But  where  a  contract  provides 
for  the  extension  of  its  operation  to  new  parties  upon 
reasonable  terms  and  regulations,  the  parties  will  not  be 
permitted  to  destroy  its  effectuation  or  enforcement  by 
failing  to  act.  Under  these  circumstances  a  court  of  equity 
will  state  what  these  terms  and  regulations  are.  This  is 
not  making  a  new  contract  for  the  parties,  but  the  carry- 

1  Piedmont  Pav.  Co.  v.  Allman,  136  Cal.  88,  68  Pac.  493;  Philadelphia  v. 
Jewell,  135  Pa.  St.  329,  20  Atl.  281;  U.  S.  t;.  Dietrich,  126  Fed.  671. 

2  Burton  v.  U.  S.,  202  U.  S.  344,  50  L.  Ed.  1057;  Scotland  County  v.  Hill, 
132  U.  S.  107,  117,  33  L.Ed.  261,  aff'g  25  Fed.  395;  111.  Surety  Co.  v.  John 
Davia  Co.,  244  U.  S.  376,  381,  61  L.  Ed.  1206,  aff'g  226  Fed.  653. 

» Joy  V.  St.  Louis,  138  U.  S.  1,  38,  47,  34  L.  Ed.  843,  aff'g  29  Fed.  546. 
*  Conway  &c.  Co.  t;.  Chicago,  274  111.  369,  113  N.  E.  703;  Gamewell  &c.  Co. 
V.  LaPorte,  102  Fed.  417. 

274 


CHAP.  XXV  ]  GENERAL  RULES  [  §  174 

ing  out  of  the  intention  of  the  parties  and  the  enforcement 
of  the  very  contract  intended.^ 

§  174.  Construction  Should  Effect  Reasonable  Result  and 
Lawful  Purpose. 

A  construction  which  is  lawful,  which  preserves  good 
faith,  and  frees  the  contract  from  the  imputation  of 
impairing  rights  will  be  accepted,  if  possible,  in  preference 
to  a  contrary  construction.  For  where  a  contract  is  fairly 
open  to  two  constructions,  by  one  of  which  it  would  be 
lawful  and  the  other  unlawful,  the  former  must  be 
adopted.^  If  of  two  constructions  possible,  one  will  render 
the  contract  vahd  and  the  other  void,  the  former  will  be 
adopted  if  it  can  be  done  without  violence  to  the  ascer- 
tained intention  of  the  parties.^  It  is  presumed  that  the 
parties  to  a  contract  intended  a  lawful  purpose,  that  they 
knew  the  law  and  intended  to  obey  it."*  The  language  of 
contracts  should  not  be  given  a  strained  construction,  but 
should  be  interpreted  to  accompHsh  a  reasonable  rather 
than  an  unreasonable  result.^  When  there  is  doubt  or 
uncertainty  as  to  the  meaning  of  words  in  an  instrument, 

1  Joy  V.  St.  Louis,  138  U.  S.  1,  34  L.  Ed.  843,  aff'g29  Fed.  546;  Providence 
V.  St.  John's  Lodge,  2  R.  I.  46.  See  Jones  v.  Lanier,  198  Ala.  363,  73  So. 
535. 

2  Hobbsv.  McLean,  117  U.  S.  567,  29  L.  Ed.  940;  U.  S.  v.  Cent.  Pac.  R.  Co., 
118  U.  S.  235,  30  L.  Ed.  173,  aff'g  21  Ct.  CI.  180;  Finley  v.  Sch.  Dist.,  51  Mont. 
411,  153  Pac.  1010;  Foard  County  v.  Sandifer,  105  Tex.  420,  151  S.  W.  523; 
Lamar  W.  Co.  v.  Lamar,  128  Mo.  188,  26  S.  W.  1025,  31  S.  W.  756. 

'  Finley  v.  Sch.  Dist.,  supra. 

*  Foard  County  v.  Sandifer,  supra;  Tomlinson  v.  Hopkins  County,  57  Tex. 
572. 

6  Ryan  v.  Dubuque,  112  Iowa,  284,  83  N.  W.  1073;  McCain  v.  Des  Moines, 
128  Iowa,  331,  103  N.  W.  979;  Conway  Co.  v.  Chicago,  274  111.  369,  113  N.  E. 
703;  Jersey  City  v.  Flynn,  74  N.  J.  Eq.  104,  70  Atl.  497,  mod.  76  N.  J.  Eq. 
607,  76  Atl.  3;  St.  Louis  v.  St.  Louis  &  S.  F.  R.  Co.,  228  Mo.  712,  129  S.  W. 
691;  Royalton  v.  Royalton  &  W.  T.  Co.,  14  Vt.  311;  U.  S.  v.  Cent.  Pac.  R.  Co., 
118  U.  S.  235,  30  L.  Ed.  173,  aff'g  21  Ct.  CI.  180;  Bayne  v.  U.  S.,  195  Fed.  236, 
241. 

275 


§174]         contract:   CONSTRUCTION,   OPERATION      [  PART  III 

if  possible,  they  should  not  be  so  construed  as  to  place  one 
of  the  parties  entirely  at  the  mercy  of  the  other.  ^ 

§  175.  Meaning  and  Kind  of  Notice. 

When  a  contract  requires  a  notice  to  be  given  for  the 
purpose  of  creating  a  UabiUty  or  imposing  an  obhgation, 
personal  notice  is  intended  and  should  be  given,  unless  the 
parties  expressly  stipulate  that  the  notice  shall  be  served 
or  given  in  some  other  way  such  as  mailing.  Of  course 
where  the  party  to  whom  the  notice  must  be  given  con- 
ceals hunself  or  resorts  to  trick  or  artifice  to  avoid  the 
service  of  a  personal  notice,  reasonable  efforts  to  serve  the 
notice  personally  will  operate  to  satisfy  the  duty  imposed.^ 
So  where  a  statute  requires  notice  to  be  given  to  a  party 
as  a  basis  of  a  forfeiture  of  some  right  or  interest,  it  means 
a  notice  in  writing  in  the  absence  of  some  provision  in  the 
statute  which  prescribes  a  different  method  of  giving  the 
notice.^ 

1  Dunning  v.  County  of  Orange,  139  N.  Y.  App.  Div.  249,  204  N.  Y.  647, 
97  N.  E.  1104. 

2  Haldane  t;.  U.  S.,  69  Fed.  819. 

3  Erving  v.  Mayor,  131  N.  Y.  133,  29  N.  E.  1101.  See  Becker  v.  Churdan, 
175  Iowa,  159,  157  N.  W.  221. 


276 


CHAPTER  XXVI 

SPECIAL  CIRCUMSTANCES 

§  176.  Usages  of  Trade  or  Business. 

The  signification  or  import  of  words  or  expressions 
in  any  trade  or  business  may  be  so  fixed  by  usage  that,  in 
order  to  arrive  at  the  true  intent  of  the  parties  in  entering 
a  contract,  resort  must  be  had  to  proof  of  the  technical 
meaning  of  such  words  or  expressions.  But  the  usages  of 
trade  fall  into  the  same  class  as  all  other  rules  of  construc- 
tion. They  are  mere  aids  to  explain,  not  express  and  clear 
stipulations,  but  those  of  doubtful  and  equivocal  char- 
acter, and  to  ascertain  the  meaning  of  words  of  doubtful 
signification  or  which  may  be  understood  in  different 
senses.  Such  extrinsic  evidence  is  admissible  because,  like 
all  rules  of  interpretation,  it  is  presumed  the  parties  knew 
of  their  existence  and  contracted  with  reference  to  them. 
But  if  the  usages  are  inconsistent  with  the  contract  or 
expressly  or  by  necessary  implication  contradict  or  vary  it, 
they  will  not  be  received  in  evidence.  A  usage  or  trade 
meaning  wiU  not  be  given  effect  when  this  defeats  the  plain 
language  of  the  agreement.^  If  a  contract  gives  to  words 
used  a  plain  and  unambiguous  signification,  the  abstract  or 
commercial  meaning  of  those  words  is  irrelevant  and  is  not 
admissible.  The  commercial  meaning  of  words  cannot  be 
imported,  through  expert  testimony,  into  a  contract  for  the 
purpose  of  destroying  its  plain  and  obvious  intendment. ^ 

» Dillow  &  Co.  V.  MonticeUo,  145  Iowa,  424,  124  N.  W.  186. 
» Bowers  Hydr.  Dredging  Co.  v.  U.  S.,  211  U.  S.  176,  53  L.  Ed.   136,  aflf'g 
41  Ct.  CI.  214. 

277 


§  176  ]       contract:  construction,  operation    [  part  ni 

It  is  a  universal  rule  that  usages  and  customs  are  never 
allowed  to  operate  against  express  contracts.^  To  permit 
evidence  of  a  usage  or  custom,  it  must  be  so  general  as 
to  raise  the  presumption  that  the  parties  had  knowledge 
of  it  and  contracted  with  reference  to  it.  The  party 
claiming  such  a  usage  must  prove  it.-  But  in  giving 
proof  of  a  custom  a  party  is  not  permitted  to  prove  his 
construction  of  the  contract.^  To  prove  such  usage  or 
custom  it  is  not  necessary  to  specially  plead  it.^ 

§  177.  Inconsistent  Provisions — Conflicting  Clauses. 

WTien  repugnancy  is  found  between  clauses  of  a  contract, 
the  one  which  essentially  requires  something  to  be  done  to 
effect  the  general  purpose  of  the  contract  itself  is  entitled 
to  greater  consideration  than  the  other,  which  tends  to  de- 
feat a  full  performance,  and  repugnant  words  may  be  re- 
jected in  favor  of  a  construction  which  makes  effectual  the 
evident  purpose  of  the  entire  agreement.  The  secondary 
must  give  way  to  the  essential.^  The  first  of  two  contra- 
dictory provisions  ordinarily  will  prevail,  but  not  where  it 
is  provided  by  statute  that  when  an  instrument  consists 
partly  of  written  and  partly  of  printed  form,  the  former 
controls  the  latter,  if  the  two  are  inconsistent.  The  stat- 
ute supercedes  the  common  law.^  Where  there  is  a  con- 
flict so  irreconcilable  between  essential  provisions  of  the 
assumed  contract  and  material  parts  of  the  specifications, 
and  the  specifications  cannot  in  reason  be  ignored,  or 
treated  as  abrogated,  the  contract  is  void  for  uncertainty 

1  Bumham  v.  Milwaukee,  100  Wis.  55,  75  N.  W.  1014. 

2  Fellows  V.  Dorsey,  171  Mo.  App.  289,  157  S.  W.  995. 

» Indep.  Sch.  Dist.  v.  Swearingen,  119  Iowa,  702,  94  N.  W.  206. 

*  Becker  v.  Churdan,  175  Iowa,  159,  157  N.  W.  221. 

^  MorriU  &  W.  Cons.  Co.  v.  Boston,  186  Mass.  217,  71  N.  E.  550. 

•  Urbany  v.  Carroll,  176  Iowa,  217,  157  N.  W.  852. 

278 


CHAP.  XXVI  ]  SPECIAL   CIRCUMSTANCES  [  §  178 

and  may  not  be  enforced.^  Where  a  contract  contained  a 
provision  that  no  extra  work  should  be  allowed  or  paid 
for  and  the  contract  required  a  contractor  to  go  down  to 
solid  rock  to  erect  abutments  and  the  contractor  refused 
to  sign  the  contract,  and  an  added  stipulation  was  inserted 
to  the  effect  that  if  rock  was  not  found  as  shown  by  the 
plans  and  borings  he  should  be  paid  for  any  extra  work,  this 
clause  operated  to  abrogate  or  hmit  the  ''no  extra"  clause 
so  far  as  it  was  inconsistent  with  it.^ 

§  178.  General  Words  and  Expressions  are  Controlled  by 
Specific. 
General  expressions  are  restricted,  under  a  famihar 
maxim,  by  specific  terms  which  succeed  them,  and  are  not 
permitted  to  control  the  specific  provisions  of  the  con- 
tract.3  A  general  clause  of  a  contract,  which  provides  that 
everything  necessary  to  make  structures  or  work  complete 
and  ready  for  use  shall  be  furnished  by  the  contractor 
whether  specified  or  not,  must  be  governed  by  specific 
provisions  which  describe  exactly  and  in  detail  what  is  to 
be  furnished.^  Where  a  contract  provides  that  the  con- 
tractor shall  be  liable  for  all  damages  to  person  and  prop- 
erty arising  from  his  negligence  or  of  his  employees  and 
for  all  violations  of  law,  city  ordinances  or  government 
regulations,  and  generally  provides  that  the  contractor 
shall  be  liable  for  all  accidents  causing  loss  to  the  city, 
this  latter  general  clause  will  be  controlled  by  the  specific 
language,  which  hmits  the  liability  of  the  contractor  by 
the   restriction   contained   in   the   specific   and   particular 

1  U.  S.  V.  EUicott,  223  U.  S.  524,  56  L.  Ed.  535. 

2  Capital  City  B.  &  P.  Co.  v.  Des  Moines,  136  Iowa,  243,  113  N.  W.  835. 
^Erickson  v.  U.  S.,  107  Fed.  204;  Johnson  County  v.  Wood,  84  Mo.  489; 

English  V.  Shelby,  116  Ark.  212,  172  S.  W.  817;  Vulcanite  Pav.  Co.  v.  PhUadel- 
phia,  239  Pa.  St.  524,  86  Atl.  1086. 
*  Erickeon  v.  U.  S.,  supra. 

279 


§178]       contract:  construction,  operation    [  part  hi 

statement  that  he  shall  be  liable  for  all  accidents  caused 
by  negligence.  ^  So  where  a  government  contract  provides  in 
general  language  that  no  claim  shall  be  made  against  it  on 
account  of  any  excess  or  deficiency  in  quantities,  and  that 
bidders  are  expected  to  examine  the  maps  and  drawings  and 
to  visit  the  locahty  of  the  work  and  to  make  their  own  esti- 
mates of  facihties  and  difficulties  attending  the  work,  these 
provisions  cannot  prevail  so  as  to  deprive  a  contractor  of 
damages  suffered  because  of  a  positive  statement  in  the 
specifications  indicating  the  specific  character  of  filHng 
back  of  an  old  dam.^ 

§  179.  Prior  Negotiations — Reference  to  in  Construction 
of  Meaning  of  Language  Used. 

Verbal  agreements  between  the  parties  to  a  written 
contract  made  before,  or  at  the  time  of  execution,  of  the 
contract  are  in  general  inadmissible  to  vary  its  terms  or 
to  affect  its  construction.  All  such  verbal  agreements  are 
to  be  considered  as  merged  in  the  writing.  Oral  agree- 
ments subsequently  made  on  a  new  and  valuable  considera- 
tion, and  before  the  breach  of  the  contract,  stand  upon  a 
different  footing.  Such  agreements  may  vary  any  of  its 
terms  or  may  waive  or  discharge  it  altogether.^ 

But  previous  and  contemporaneous  transactions  may 
very  properly  be  taken  into  consideration  to  ascertain  the 
subject-matter  of  a  contract  and  the  sense  in  which  the 
parties  have  used  particular  words. 

This  is  not  for  the  purpose  of  making  a  contract  for 

1  New  York  v.  American  Railway  T.  Co.,  66  Misc.  166,  143  N.  Y.  App. 
Div.  928. 

2  HoUerbach  v.  U.  S.,  233  U.  S.  165,  58  L.  Ed.  898.  See  U.  S.  v.  Spearin, 
248  U.  S.  132,  63  L.  Ed.  166;  U.  S.  v.  Atlantic  Dredging  Co.,  253  U.  S.  1,  64 
L.  Ed.  735;  U.  S.  v.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 

'  Riley  v.  Brooklyn,  46  N.  Y.  444;  Hawkins  v.  U.  S.,  96  U.  S.  689,  24  L.  Ed. 
607,  aff'g  12  Ct.  CI.  181. 

280 


CHAP.  XXVI  ]  SPECIAL   CIRCUMSTANCES  [  §  182 

the  parties,  but  to  understand  what  contract  was  actually 
made.  In  such  cases  of  doubt  as  to  the  meaning  of  lan- 
guage actually  used,  reference  is  sometimes  had  to  prior 
negotiations.* 

§  180.  Verbal  Agreements  Merged. 

All  verbal  agreements  between  the  parties  to  a  public 
contract  in  writing  made  before  or  at  the  time  of  execution 
of  the  instrument  are  considered  as  merged  in  the  writing.^ 
Subsequent  oral  agreements  stand  upon  a  different  footing 
and  if  made  upon  sufficient  consideration  may  alter,  vary, 
waive  or  discharge  the  prior  writing.^ 

§  181.  Insertion  of  Writing  in  Printed  Form. 

Words  written  in  ink  in  a  printed  form  are  given  more 
force,  since  they  are  presumed  to  express  the  deliberate 
intention  of  the  parties  more  fully,  than  the  adopted  pro- 
visions of  printed  or  even  typewritten  forms. ^  The  general 
rule  is  that  where  a  printed  form  is  used  to  be  filled  up  by 
writing,  the  written  part  will  control  in  the  construction 
of  the  contract.^ 

§  182.  Grammatical  Construction. 

Punctuation  is  not  allowed  to  conclusively  determine  the 
character  of  a  writing.  The  presence  or  absence  of  a 
comma  or  other  mark  of  punctuation  is  a  rather  unreliable 
standard  by  which  to  interpret  a  writing.     So  it  is  held 

lU.  S.  V.  Bethlehem  Steel  Co.,  205  U.  S.  105,  51  L.  Ed.  731;  Simpson  v. 
U.  S.,  199  U.  S.  397,  50  L.  Ed.  245;  Brawley  v.  U.  S.,  96  U.  S.  168,  24  L.  Ed.  622, 
aff'g  11  Ct.  CI.  522;  English  v.  Shelby,  116  Ark.  212,  172  S.  W.  817. 

2  Hawkins  v.  U.  S.,  96  U.  S.  689,  24  L.  Ed.  607,  aff'g  12  Ct.  CI.  181;  Bumham 
V.  MUwaukee,  100  Wis.  55,  75  N.  W.  1014. 

»  Hawkins  v.  U.  S.,  supra.   See  Simpson  v.  U.  S.,  199  U.  S.  397,  50  L.  Ed.  245. 

<  Sprague  Elec.  Co.  v.  Hennepin  County,  83  Minn.  262,  86  N.  W.  332. 

6  Chicago  V.  Weir,  165  lU.  582,  46  N.  E.  725;  People  v.  Dulaney,  96  lU.  503. 

281 


§  182  ]       contract:  construction,  operation    [  part  m 

generally  that  punctuation  may  be  disregarded  entirely  or 
it  may  when  useful  be  resorted  to  as  an  aid  in  construc- 
tion, which  it  only  is  at  most.^ 

§  183.  Construction  against  Party  Who  Draws  Contract. 

WTien  there  is  ambiguity  or  obscurity  in  a  contract^ 
which  the  other  party  to  the  instrument  does  not  explain, 
it  will  be  construed  against  the  party  drawing  the  con- 
tract.- Ambiguous,  doubtful  or  obscure  expressions  are 
interpreted  against  the  party  who  prepared  the  contract 
and  used  the  language.^  Language  in  deeds  or  grants  is 
construed,  where  it  admits  of  two  constructions,  against 
the  grantor  even  though  it  be  the  public*  In  some 
jurisdictions  public  contracts  are  construed,  not  contra 
proferentum,  but  liberally  in  favor  of  the  public.^  An  ex- 
amination of  these  decisions  shows  that  such  rule  only 
appHes  to  cases  involving  the  grants  of  valuable  franchises, 
but  the  rule  cannot  justly  be  extended  to  other  public 
contracts,  and  as  to  these  the  same  rule  of  construction 
applies  as  is  invoked  in  the  case  of  private  contracts. 
In  some  States  the  matter  is  controlled  by  statute,  which 
provides  that  all  uncertainty  in  a  pubhc  contract  is  pre- 
sumed to  be  caused  by  the  private  party  contracting  with 
a  public  body  or  officer.^ 

'  De  Soto  County  v.  Dickson,  34  Miss.  150;  Commonwealth  v.  Grant, 
201  Mass.  458,  87  N,  E.  895;  Cochran  v.  Vermilion  County,  113  111.  App. 
140. 

*  McClintic  M.  Cons.  Co.  e;.  Hudson  County  Bd.,  83  N.  J.  Eq.  539,  91  Atl. 
881 

•  Gibbons  v.  U.  S.,  15  Ct.  CI.  174,  109  U.  S.  200,  27  L.  Ed.  906. 

« Alton  V.  111.  Trans.  Co.,  12  111.  38,  52  Am.  D.  479;  Duryea  v.  Mayor,  62 
N.  Y.  592;  Carthage  T.  P.  Mills  v.  Carthage,  200  N.  Y.  1,  93  N.  E.  60. 

"  Muncie  Nat.  Gas  Co.  v.  Muncie,  160  Ind.  97,  66  N.  E.  436;  Omaha  W.  C.  v. 
Omaha,  147  Fed.  1;  Joy  v.  St.  Louis,  138  U.  S.  1,  34  L.  Ed.  843,  aff'g  29  Fed. 
546. 

« State  V.  Sapulpa,  58  Okla.  550,  160  Pac.  489. 

282 


CHAP.  XXVI  ]  SPECIAL   CIRCUMSTANCES  [  §  184 

§  184.  Construction — Sale    of    Goods — Warranty    as    to 
Quality  or  Quantity. 

Where  a  contract  is  made  to  sell  or  furnish  certain  goods, 
identified  by  reference  to  independent  circumstances,  such 
as  a  lot  on  deposit  in  a  warehouse,  or  all  that  may  be 
manufactured  in  a  named  establishment,  or  that  may  be 
shipped  in  certain  vessels  and  the  quantity  is  named  with 
the  qualification  of  ''about"  or  ''more  or  less,"  or  words  of 
hke  import,  the  contract  applies  to  the  specific  lot,  and  the 
naming  of  the  quantity  is  not  regarded  as  in  the  nature  of 
a  warranty,  but  only  as  an  estimate  of  the  probable 
amount,  in  reference  to  which  good  faith  is  all  that  is 
required  of  the  party  making  it.^  But  when  no  such 
independent  circumstances  are  referred  to  and  the  engage- 
ment is  to  furnish  goods  of  a  certain  quahty  or  character  to 
a  certain  amount,  the  quantity  specified  is  material  and 
governs  the  contract.^  A  contract  to  deHver  eight  hundred 
eighty  cords  of  wood  more  or  less  as  shall  be  determined  to 
be  necessary  is  not  for  the  delivery  of  any  particular  lot  or 
any  particular  quantity,  and  the  quantity  designated  is  to 
be  regarded  merely  as  an  estimate  of  what  may  be  re- 
quired. ^  A  contract  for  furnishing  stamped  envelopes  and 
newspaper  wrappers  in  such  quantities  as  may  be  called  for 
by  the  Post  Office  Department  during  a  period  of  four  years 
from  a  stated  date,  is  an  absolute  contract  entitling  the 
contractor  to  supply  such  department  all  needed  during 
that  period,  and  may  not  be  revoked.* 


1  Brawley  v.  U.  S.,  96  U.  S.  168,  24  L.  Ed.  622,  aff'g  11  Ct.  CI.  522. 

2  Brawley  v.  U.  S.,  supra;  U.  S.  v.  Purcell  Env.  Co.,  249  U.  S.  313,  63  L.  Ed. 
620. 

*  Brawley  v.  U.  S.,  supra. 

4  U.  S.  V.  Purcell  Envelope  Co.,  249  U.  S.  313,  63  L.  Ed.  620. 


283 


§  185  ]      contract:  construction,  operation    [  part  hi 

§  185.  Operation — Construction — Clause    of    Contract    to 
Maintain  Repairs  in  Pavement. 

WTiere  a  contract  contains  a  clause  which  provides  that 
during  a  certain  period  aft^r  acceptance  by  the  pubUc  body 
the  contractor  will  maintain  and  repair  the  pavement,  the 
effect  of  which  is  to  guarantee  the  durability  of  his  work, 
and  it  provides  for  the  serving  of  written  notice  of  defects, 
he  can  only  be  held  to  make  such  repairs  as  he  is  called  on 
to  make  by  notice  as  indicated.^  If  the  provision  is  that 
should  the  paving  become  defective  from  improper  material 
or  construction,  repairs  may  be  made  by  the  public  body 
at  the  expense  of  the  contractor,  the  latter  can  only  be 
made  liable  for  defects  which  are  the  result  of  improper 
material  or  construction.^  And  a  contractor  will  not  be 
liable  for  repairs  if  the  public  body  in  making  the  repairs 
substitutes  a  new  kind  of  pavement.^  In  hke  manner  if 
the  public  body  allows  the  pavement  to  fall  into  a  deep 
state  of  disrepair,  so  that  it  is  in  abnormal  condition,  it 
must  restore  it  to  a  normal  condition  before  it  can  prop- 
erly require  the  contractor  to  make  repairs.*  The  clause 
will  not  be  extended  to  include  damage  caused  by  the 
bursting  of  a  water  main.^  When  a  city  includes  a  repair 
clause  in  its  paving  contract  which  imposes  the  duty  upon 
the  paving  contractor  to  keep  it  in  repair  during  a  cer- 
tain period,  this  will  operate  to  relieve  a  railroad  company 
having  the  statutory  duty  to  pave  between  its  tracks 
from  the  duty  of  repairing  such  pavement  and  from  lia- 

1  O'Keeffe  v.  New  York,  173  N.  Y.  474,  66  N.  E.  194;  Warren-Scharf  A.  P. 
Co.  V.  St.  Paul,  69  Minn.  453,  72  N.  W.  711. 

2  American  Bond  Co.  v.  Ottumwa,  137  Fed.  572;  Dist.  of  Columbia  v.  Cle- 
phane,  2  Mackey,  155,  aff'd  110  U.  S.  212,  28  L.  Ed.  122;  Morley  v.  St.  Joseph, 
112  Mo.  App.  671,  87  S.  W.  1013. 

'  Dist.  of  Columbia  v.  Clephane,  supra. 

*  State  V.  New  Orleans  &  C.  R.  Co.,  52  La.  Ann.  1570,  28  So.  111. 

» Green  River  A.  Co.  v.  St.  Louis,  188  Mo.  576,  87  S.  W.  985. 

284 


CHAP.  XXVI  ]  SPECIAL   CIRCUMSTANCES  [  §  185 

bility  for  defects  during  such  period.^  Where  a  public 
service  company  under  its  franchise  contract  agrees  to  re- 
pave  between  and  next  its  rails  with  the  same  material 
used  by  the  city  in  repaving,  it  is  for  the  city  where  unre- 
strained by  contract  to  determine  what  kind  of  pavement 
pubhc  convenience  and  necessity  demand,  and  courts  can- 
not control  its  determination  as  arbitrary  and  unreasonable.^ 

1  Binninger  v.  New  York,  177  N.  Y.  199,  69  N.  E.  390. 

2  Milwaukee  Elec.  R.  Co.  v.  Milwaukee,  252  U.  S.  100,  64  L.  Ed.  476. 


285 


CHAPTER  XXVII 

WHERE  SEVERAL  INSTRUMENTS  FORM  CONTRACT 

§  186.  Several  Instrumental   Parts   of   One   Transaction 
Read  Together. 

It  is  a  general  rule  that  written  instruments  executed  at 
the  same  time,  or  about  the  same  time,  between  the  same 
parties  and  relating  to  the  same  subject-matter,  may  be 
read  together  for  the  purposes  of  construction  and  inter- 
pretation and  to  arrive  at  the  intention  of  the  parties.* 
But  where  they  do  not  relate  to  the  same  subject-matter 
and  are  not  executed  about  the  same  time,  the  rule  can 
have  no  application.  The  identity  of  parties  and  subject- 
matter  is  not  controlHng  where  the  intention  is  that  the 
contracts  shall  be  separate  contracts.-  Even  where  the 
contracts  are  connected  one  with  the  other  by  reference  but 
only  for  Umited  purposes,  the  union  of  contracts  will 
not  be  extended  beyond  the  purposes  intended.^  So  where 
the  resolutions  of  a  pubUc  board,  recorded  on  the  minutes 
of  that  body,  are  made  a  part  of  a  contract,  the  contract 
and  the  record  will  be  read  together,  according  effect  to 
each  pro\dsion,  if  practicable.''  If  the  written  contract 
makes  both  the  drawings  and  specifications  a  part  of  it, 
and  there  is  no  inconsistency  between  the  drawings  and 

1  McMaster  v.  State,  108  N.  Y.  542,  550,  15  N.  E.  417;  New  Britain  v.  New- 
Britain  Tel.  Co.,  74  Conn.  326,  329,  50  Atl.  881,  1015;  Atcheson  v.  Hutchison, 
51  Tex.  223. 

2  McMaster  v.  State,  supra. 

'Beattie  v.  McMullen,  80  Conn.  160,  67  Atl.  488;  Guerini  Stone  Co.  v. 
Carlin  Cons.  Co.,  240  U.  S.  264,  60  L.  Ed.  636. 
*  Mobile  County  v.  Linch,  198  Ala.  57,  73  So.  423. 

286 


CHAP.  XXVII  ]    SEVERAL   INSTRUMENTS  AS   CONTRACT    [  §  186 

the  specifications,  but  one  is  incomplete  because  not  show- 
ing certain  materials  to  be  used,  one  will  be  considered  as 
supplemental  to  the  other,  and  all  will  be  read  together.^ 
Where  the  contract  mentions  a  specific  and  defijiite  date 
to  commence  work  and  to  complete  it,  a  general  state- 
ment in  the  specifications  fixing  a  different  time  from  the 
time  fixed  in  the  contract  and  imposing  damages  for  delay 
cannot  apply  and  the  contract  will  control.^  But  if  there 
is  inconsistency  between  the  specifications  and  the  con- 
tract and  the  former  cannot  be  ignored,  the  contract  is 
void.^  Where  a  subcontract  to  furnish  stone  for  abutments 
of  a  bridge  provided  that  the  stone  must  comply  with  the 
original  contract,  which  was  made  a  part  of  the  subcon- 
tract for  greater  particularity  and  to  make  the  provisions 
of  the  subcontract  clear,  and  only  such  parts  of  the  original 
contract  as  might  be  applicable  were  incorporated,  such  a 
reference  to  the  original  contract  will  not  bind  the  subcon- 
tractor to  comply  with  the  provisions  requiring  extras  to 
be  on  the  written  order  of  the  engineer.^  A  letter  written 
by  a  contractor  to  the  pubUc  body  and  attached  to  the 
written  contract  before  it  is  executed  amounts  to  a  modifi- 
cation of  the  formal  terms  of  the  contract  to  the  extent  at 
least  of  showing  how  such  terms  must  be  construed.^  A 
letter  which  is  delivered  to  a  public  body  contemporane- 
ously with  the  accepted  proposal  will  be  read  as  part  of 
the  contract  and  explanatory  thereof,  and  will  Umit  the 
place  where  the  work  is  to  be  done  as  therein  de- 
scribed.^ 

1  Smith  V.  Bd.  of  Educ.  of  Parkersburg,  76  W.  Va.  239,  85  S.  E.  513. 

2  MiUer  v.  Hamilton,  216  Fed.  131.    See  Dean  v.  Mayor,  167  N.  Y.  13,  60 
N.  E.  236. 

3  U.  S.  V.  EUicott,  223  U.  S.  524,  56  L.  Ed.  535. 
*  Beattie  v.  McMullen,  supra. 

5  Sanborn  v.  U.  S.,  46  Ct.  CI.  254. 

«  N.  Y.  Metal  Ceiling  Co.  v.  New  York,  133  N.  Y.  App.  Div.  110. 

287 


§  187  ]       contract:  construction,  operation    [  part  hi 

§  187.  Several  Statutes  Constituting  Agreement  will  be 
Construed  Together. 

Where  several  acts  of  Congress  taken  together  constitute 
the  contract  between  the  United  States  and  its  contractor, 
they  are  to  be  construed  together  as  one  act,  and  one  part 
will  be  interpreted  by  another.^  In  Hke  manner  an  ordi- 
nance made  part  of  a  contract  will  be  read  with  it.^ 

§  188.  Agreement  to  Agree  to  do  Something. 

An  agreement  to  do  a  certain  thing  and  an  agreement 
to  agree  to  do  it  are  legally  identical,^  and  in  contempla- 
tion of  law,  the  refusal  to  carry  out  the  latter  agreement 
carries  the  same  consequence  in  damages.^ 

§  189.  Instruments  Annexed  or  Referred  to. 

Where  other  instruments  are  made  a  part  of  the  contract 
by  annexation  or  reference  they  will  be  interpreted  as  part 
thereof.^  But  maps,  profiles,  estimates  and  proposals 
constitute  no  part  of  the  consummated  agreement  between 
the  parties,  except  as  they  are  referred  to  in  the  contract 
and  by  such  reference  incorporated  into  and  made  a  part 
of  it.^  Accordingly  reference  for  a  limited  purpose  will 
make  the  principal  contract  a  part  of  a  subcontract  or 
other  contract  only  for  that  purpose.^    Where  there  is  a 

»  U.  S.  V.  Cent.  Pac.  R.  Co.,  118  U.  S.  235,  30  L.  Ed.  173,  aff'g  21  Ct.  CI.  180. 

2  State  ex  rel.  Keith  v.  Comm.  Council,  138  Ind.  455,  37  N.  E.  1041. 

»  North  Bergen  Bd.  of  Educ.  t^.  Jaeger,  67  N.  J.  L.  39,  50  Atl.  583. 

*  Lynch  v.  Mayor,  2  N.  Y.  App.  Div.  213;  Pennell  v.  Mayor,  17  Id.  455; 
Williams  v.  New  York,  118  Id.  756,  763,  764,  192  N.  Y.  541,  84  N.  E.  1123. 

f"  Riley  v.  Brooklyn,  46  N.  Y.  444;  Dean  v.  New  York,  167  N.  Y.  13,  60  N.  E. 
236;  Barry  v.  New  York,  38  N.  Y.  App.  Div.  632;  Cent.  Bit.  Pav.  Co.  v.  Mt. 
Clemens,  143  Mich.  259,  106  N.  W.  888;  Lake  View  v.  MacRitchie,  134  111.  203, 
25  N.  E.  663.  See  Isaacs  v.  Dawson,  70  N.  Y.  App.  Div.  232,  174  N.  Y.  537, 
66  N.  E.  1110. 

«  Riley  v.  Brooklyn,  supra;  Dunn  v.  New  York,  205  N.  Y.  342,  98  N.  E.  495. 

'  Beattie  v.  McMullen,  80  Conn.  160,  67  Atl.  488;  Guerini  Stone  Co.  v. 
Carlin  Cons.  Co.,  240  U.  S.  264,  60  L.  Ed.  636;  People  ex  rel.  Williams  Eng.  Co. 
V.  Metz,  193  N.  Y.  148,  85  N.  E.  1070,  194  N.  Y.  145,  86  N.  E.  986. 

288 


CHAP.  XXVII  ]    SEVERAL   INSTRUMENTS   AS   CONTRACT    [  §  190 

difference  or  discrepancy  between  the  contract  and  a  plan 
or  specifications,  the  contract  will  control.^  Where  there 
are  differences  between  several  sets  of  plans  furnished  by 
a  public  body  as  a  guide  for  estimates  of  work  proposed 
to  be  let,  the  one  furnished  to  a  contractor  which  he 
made  the  foundation  of  his  contract  will  control.  Since 
such  differences  in  plans  are  traceable  to  the  fault  of  the 
public  body,  it  will  not  be  permitted  to  take  advantage  of 
its  own  wrong  to  the  prejudice  of  the  contractor. ^ 

§  190.  Reference  to  a  Prior  Abandoned  Contract. 

Where  a  public  body  makes  a  contract  to  complete  a 
prior  abandoned  contract,  the  new  contract  is  independent 
of  the  old  and  stands  the  same  as  if  no  other  had  been 
made.  The  new  contractor  is  entitled  to  nothing  for 
what  the  former  contractor  did  and  is  responsible  for  no 
default  of  his.  Reference  to  the  old  contract  in  the  new 
is  only  to  measure  the  amount  of  work  to  be  done  there- 
under. There  is  no  privity  of  contract  by  which  he  can 
claun  to  be  exempt  from  the  application  of  a  statute 
passed   after   the  execution   of   the   abandoned   contract.^ 

1  Dean  v.  Mayor,  167  N.  Y.  13,  60  N.  E.  236;  Palladino  v.  Mayor,  56  Hun, 
565,  125  N.  Y.  733,  26  N.  E.  757;  Harvey  v.  U.  S.,  8  Ct.  CI.  501;  Miller  v. 
Hamilton,  216  Fed.  131. 

2  Sexton  V.  Chicago,  107  111.  323;  Beckwith  v.  New  York,  148  N.  Y.  App. 
Div  658,  210  N.  Y.  530,  103  N.  E.  1121;  Dean  v.  Mayor,  supra. 

5  People  ex  rel.  Williams  Eng.  Co.  v.  Metz,  193  N.  Y,  148,  85  N.  E.  1070,  194 
N.  Y.  145,  86  N.  E.  986. 


289 


CHAPTER  XXVIII 

PARTS   IMPLIED 

§  191.  Existing  Law  Part  of  Contract. 

The  laws  which  subsist  at  the  time  and  place  of  making 
a  contract,  and  where  it  is  to  be  performed,  enter  into  and 
form  a  part  of  it,  as  if  they  were  expressly  referred  to  or 
incorporated  in  its  terms.  ^  But  where  the  parties  do  not 
intend  the  erection  of  a  fence  around  a  reservoir  and  no 
mention  of  it  is  made  in  the  contract,  the  provisions  of  a 
statute  relating  to  the  erection  of  fences  will  not  be  in- 
jected into  a  contract,  for  this  would  be  to  add  a  term  to 
the  contract  not  agreed  upon  by  the  parties,  and  this  the 
court  cannot  do.^  Where  a  railroad  company  entered 
into  a  contract  to  grade  a  street  over  which  the  county  at 
the  time  of  the  contract  had  jurisdiction,  the  law  will- 
presume  that  the  parties  contracted  with  reference  to  the 
facts  and  the  law  as  they  existed  at  such  time.^ 

§  192.  Terms  Implied  in  Contracts. 

There  are  many  terms  of  a  contract  which,  while  not 
actually  expressed  therein,  will  be  implied  by  law.  Al- 
though not  actually  uttered,  terms  which  the  law  impUes 
and  which  the  parties  intended  to  express  but  failed,  will  be 

1  Ree3  V.  Watertown,  19  Wall.  (U.  S.)  107,  22  L.  Ed.  72;  U.  S.  v.  Dietrich, 
126  Fed.  671;  Armour  P.  Co.  v.  U.  S.,  153  Fed.  1,  19;  Von  Hoffman  v.  Quincy, 
4  Wall.  (U.  S.)  535,  550,  18  L.  Ed.  403;  Jefferson  Bd.  of  Education  v.  Littrell, 
173  Ky.  78,  190  S.  W.  465;  Milwaukee  v.  Raulf,  164  Wis.  172,  159  N.  W.  819; 
Gregg  School  Township  v.  Hinshaw, Ind.  App. ,  132  N.  E.  586. 

2  Mayor  &c.  Jersey  City  v.  Jersey  City  W.  S.  Co.,  76  N.  J.  Eq.  607,  76 
Atl.  3. 

3  Ettor  V.  Tacoma,  77  Wash.  267,  137  Pac.  820. 

290 


CHAP.  XXVIII  ]  PARTS   IMPLIED  [  §  192 

included  therein  by  force  of  law.^  The  law  existing  at  the 
time  and  place  of  the  contract  is  part  of  it.^  Provisions 
of  law  or  of  the  Constitution  specially  applicable  to  the 
subject-matter  of  the  contract  are  a  part  of  it,  need  not  be 
referred  to  therein,  and  the  parties  are  presumed  to  have 
contracted  with  reference  to  these.  Under  such  existing 
laws  the  terms  of  a  contract  for  the  rendering  of  a  public 
service  are  subject  to  the  right  of  government  to  regulate 
the  service  and  the  rate  of  charge.^  Although  the  general 
rule  is  as  stated  above,  that  necessary  implications  are  as 
much  a  part  of  it,  as  though  plainly  expressed  in  it,  yet 
in  order  to  apply  this  rule  the  implication  must  arise  from 
the  language  employed  in  the  instrument,  or  be  indis- 
pensable to  effectuate  the  intention  of  the  parties.  When 
the  language  employed  is  obscure,  imperfect  or  ambiguous, 
the  instrument  is  open  to  construction  and  then  the 
prime  object  is  to  ascertain  the  intention  of  the  parties. 
In  such  case  the  court  can  go  no  further  than  to  collect 
the  intention  from  the  language  employed,  as  applied 
to  the  subject-matter  in  view  of  the  attending  circum- 
stances. The  court  cannot  by  implication  put  into  a 
written  instrument  what  the  parties  have  left  out  of  it, 
though  by  mistake,  nor  can  it  reject  what  they  have  put 
into  it,  unless  repugnant  to  some  other  part.^ 

When  a  written  contract  is  silent  in  regard  to  a  matter 
of  great  importance  to  the  parties,  it  is  not  lightly  to  be 
presumed   the   parties   intended   to   imply   an   agreement 

1  New  York  v.  Delli  Paoli,  202  N.  Y.  18,  94  N.  E.  1077;  Kinser  Cons.  Co. 
V.  State,  125  N.  Y.  Supp.  46,  54,  145  N.  Y.  App.  Div.  41,  204  N,  Y.  381,  97 
N.  E.  871;  Crocker  v.  U.  S.,  21  Ct.  CI.  255;  Taylor  v.  Dist.  of  Columbia,  17 
Ct.  CI.  367. 

-  See  §  191,  ante. 

3  State  ex  rel.  Ellis  t;.  Tampa  W.  Wks.  Co.,  56  Fla.  858,  47  So.  358,  57  Fla. 
533,  48  So.  639. 

*  Caverly  Gould  Co.  v.  Vil.  of  Springfield,  83  Vt.  396,  76  Atl.  39. 

291 


§192]       contract:  construction,  operation     [part  m 

upon  that  point.  The  mipUcation  must  appear  from  the 
whole  instrument.  The  courts  when  called  upon  to  imply 
an  obligation  or  duty  not  appearing  in  the  terms  of  a 
contract,  must  take  great  care  that  they  do  not  make  the 
contract  speak  where  it  was  intentionally  silent,  or  that 
they  make  it  speak  contraiy  to  the  intention  of  the 
parties.^  ImpUcations  contraiy  to  the  express  terms  of  a 
contract  will  not  be  indulged.  A  contractor  will  not  be 
required  to  do  something  entirely  outside  of  the  contract, 
especially  where  it  is  apparent,  not  only  from  the  nature 
of  the  transaction,  but  from  the  words  of  the  stipulations 
of  the  contract,  that  such  obligation  belongs  to  the  public 
body.-  There  is  an  implied  undertaking  on  the  part  of 
each  party  to  every  contract  that  he  will  not  intentionally 
and  purposely  do  anything  to  prevent  the  other  party 
from  carrying  out  the  agreement  on  his  part.^  The  law 
implies  good  faith  in  the  making  and  performance  of 
contracts.^  In  like  manner  the  law  imphes  the  term 
reasonable,  and  eliminates  unreason  from  many  contracts 
as  unavoidably  intended  by  the  parties  and  shown  from 
the  surrounding  circumstances.^  In  connection  with  the 
implication  of  existing  law  as  part  of  every  contract  it  is 
to  be  remembered  that  the  general  law  of  the  State  is  part 
of  or  an  amendment  of  all  municipal  charters  and  is  to  be 
read  into  every  public  contract  with  the  charter  provisions 
affecting  such  contracts  in  so  far  as  applicable.^ 

1  East  Ohio  Gas.  Co.  v.  Akron,  81  Ohio  St.  33,  90  N.  E.  40,  26  L.  R,  A.  n.  a. 
92;  Churchyard  v.  Queen  L.  R.,  1  Q.  B.  173,  195. 

2  Gibbons  v.  U.  S.  15  Ct.  CI.  174,  aff'd  109  U.  S.  200,  27  L.  Ed.  906;  Preston 
V.  Syracuse,  158  N.  Y.  356,  53  N.  E.  39. 

3  Cameron  Haw-n  Realty  Co.  v.  Albany,  207  N.  Y.  377,  101  N.  E.  162. 
*  Gardner  v.  Cameron,  155  N.  Y.  App.  Div.  750. 

5  Ferguson  Cont.  Co.  i-.  State,  70  Misc.  (N.  Y.)  472;  Kinser  Cons.  Co.  v. 
State,  204  N.  Y.  381,  97  N.  E.  871;  Jersey  City  v.  Flynn,  74  N.  J.  Eq.  104,  70 
Atl.  497;  State  ex  rel.  Ellis  v.  Tampa  W.  Wks  Co.,  56  Fla.  858,  47  So.  358. 

« Matter  of  Plattsburgh,  157  N.  Y.  78,  51  N.  E.  512. 

292 


CHAP.  XXVIII  ]  PARTS   IMPLIED  [  §  192 

In  every  contract  for  the  performance  of  construction 
work  or  the  erection  of  pubhc  buildings  there  is  an  impHed 
term  that  the  pubhc  body  for  whom  the  work  is  con- 
tracted to  be  done  will  not  obstruct  or  delay  the  con- 
tractor, but  on  the  contrary  will  always  facilitate  the 
performance  of  the  work  to  be  done  by  him.^  A  con- 
tractor may  therefore  recover  loss  entailed  while  awaiting  the 
location  of  his  work  by  the  engineer.  ^  But  a  pubhc  body 
does  not  insure  that  immediate  possession  and  use  of  the 
site  shall  be  given  to  the  builder.  Its  undertaking  is  that 
so  far  as  its  own  acts  are  concerned  possession  and  use 
shall  be  given.  If  this  is  prevented  by  a  trespasser,  the 
public  body  is  not  liable  in  damages.^ 

1  Ryder  Bldg.  Co.  v.  Albany,  187  N.  Y.  App.  Div.  868. 

2  U.  S.  V.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 

» Porter  v.  Tottenham  Urban  Council,  84  L.  J.  K.  B.  1041. 


2Q3 


CHAPTER   XXIX 

EXTRINSIC   CIRCUMSTANCES 

§  193.  Construction  by  the  Parties. 

\Miere  the  language  used  by  the  parties  to  a  pubUc 
contract  is  indefinite  or  ambiguous  and  hence  of  doubtful 
construction,  the  practical  interpretation  by  the  parties 
themselves  is  entitled  to  great,  if  not  controlling,  influence.^ 
There  is  no  surer  way  to  find  out  what  the  parties  mean 
than  to  see  what  they  have  done,  to  get  at  the  intention 
behind  what  they  say,  as  illuminated  by  what  they  do. 
Some  courts  have  extended  this  rule  and  declare  that 
where  work  is  performed  in  accordance  with  a  plan  and 
with  materials  supposed  and  understood  to  be  what  was 
required  by  contract  and  to  be  paid  for  at  the  contract 
price,  but  such  work  and  materials  are  furnished  in 
variance  from  the  literal  meaning  of  the  contract,  the 
practical  construction  which  the  parties  put  upon  its 
terms  and  according  to  which  the  work  was  done,  cannot 
be  ignored  or  disregarded,  but  must  prevail  over  the 
Hteral  meaning  of  the  contract.  ^  This  is  not  the  prevailing 
rule.     Since  this  rule  of  construction  is  like  all  others,  a 

1  Shipman  v.  Dist.  of  Columbia,  18  Ct.  CI.  291,  119  U.  S.  148,  30  L.  Ed.  337; 
Chicago  V.  Sheldon,  9  Wall.  (U.  S.)  50,  19  L.  Ed.  594;  Bd.  of  Comm'rs  of  Fulton 
County  V.  Gibson,  158  Ind.  471,  63  N.  E.  982;  Stover  v.  Springfield,  167  Mo. 
App.  328,  152  S.  W.  122;  Douglass  v.  Morrisville,  89  Vt.  393,  95  Atl.  810; 
Ferguson  Cont.  Co.  v.  State  of  N.  Y.,  70  Misc.  472,  489;  Beaver  Eng.  &  Cont. 
Co.  V.  New  York,  192  N.  Y.  App.  Div.  662;  NicoU  v.  Sands,  131  N.  Y.  19,  29 
N    E    818 

2  Dist.  of  Columbia  v.  GaUaher,  124  U.  S.  505,  31  L.  Ed.  526,  aff'g  19  Ct.  CI. 
564;  Bowers  Hydr.  Dredging  Co.  v.  U.  S.  211  U.  S.,  176,  53  L.  Ed.  136,  aff'g 
41  Ct.  CI.  214;  O'Dea  v.  Winona,  41  Minn.  424,  43  N.  W.  97. 

294 


CHAP.  XXEX  ]  EXTRINSIC   CIRCUMSTANCES  [  §  193 

mere  aid  to  ascertain  the  intention  of  the  parties,  its 
apphcation  should  find  no  instance,  except  in  cases  of 
ambiguity,  indefiniteness  or  obscurity.  Practical  construc- 
tion should,  therefore,  not  prevail  over  a  clear  and  defi- 
nite term  of  a  contract  and  only  becomes  important 
or  entitled  to  consideration  in  cases  of  doubt.  ^  Neverthe- 
less it  is  declared  that  when  the  parties  to  a  contract  of 
doubtful  meaning,  guided  by  self-interest,  enforce  it  for 
a  long  time  by  a  consistent  and  uniform  course  of  conduct, 
so  as  to  give  it  a  practical  meaning,  the  courts  will  treat  it 
as  having  that  meaning,  even  if  as  an  original  proposition 
they  might  have  given  it  a  different  one.  But  the  doctrine 
is  never  applied  unless  the  door  is  opened  by  an  ambiguity, 
which  is  the  foundation  of  the  principle  upon  which  the 
doctrine  is  rested.  The  ambiguity  required  to  exist  must 
not  be  captious,  but  should  be  so  serious  as  to  raise  a 
reasonable  doubt  in  a  fair  mind  before  the  principle  of 
practical  construction  can  be  apphed.^  A  practical  con- 
struction cannot  be  adopted  if  inconsistent  with  a  fair  and 
reasonable  rendering  of  the  contract  itself.^  Such  a  con- 
struction is,  however,  presumed  to  be  right  because  made 
by  the  parties  themselves  when  under  the  influence  of 
conflicting  interests.  This  is  true  whether  the  construction 
is  by  contemporaries  or  successors,  since  it  is  self-interest 
which  makes  construction  safe.  If  the  parties  do  not 
know  what  they  meant,  who  can  know?  Practical  con- 
struction therefore  by  uniform  and  unquestioned  acts 
from  the  inception  of  the  contract,  especially  where  long 

1  Barber  A.  P.  Co.  v.  St.  Paul,  224  Fed.  842;  Packwaukee  v.  Amer.  Bridge 
Co.,  183  Fed.  359;  Covington  v.  South  Covington  &c.  St.  Ry.  Co.,  147  Ky. 
326,  144  S.  W.  17;  Butte  Water  Co.  v.  Butte,  48  Mont.  386,  138  Pac.  195; 
Reed  v.  Trenton,  80  N.  J.  Eq.  503,  85  Atl.  270;  Bounds  v.  Hubbard  City,  47 
Tex.  C.  A.  233,  105  S.  W.  56. 

2  New  York  v.  New  York  City  Ry.  Co.,  193  N.  Y.  543,  86  N.  E.  565. 

3  Merrifield  v.  Canal  Commr's,  212  111.  456,  72  N.  E.  405. 

295 


§193]  contract:  CONSTRUCTION,    OPERATION     [  PART  III 

continued,  is  entitled  to  great,  if  not  controlling  weight, 
for  it  shows  how  the  makers  understood  their  own  con- 
tract.^ There  can  be  no  sound  basis  for  a  claim  of  prac- 
tical construction  in  the  absence  of  knowledge  of  the  facts 
and  circumstances  to  which  the  construction  relates.  No 
practical  construction,  therefore,  will  arise  from  the  fact 
that  a  public  body  overpaid  its  contractor,  if  when  such 
overpayments  are  discovered,  further  payments  are  re- 
fused. ^  Parties  may  be  bound  by  estoppel  to  accept  a 
practical  construction  put  upon  a  contract  by  themselves.^ 

§  194.  Evidence  to  Aid  Construction. 

As  sho'^Ti  in  the  preceding  sections,  where  the  terms  of 
a  contract  are  uncertain  or  obscure,  the  court  may  avail 
itself  of  all  lawful  aids  through  evidence  which  will  shed 
light  upon  the  intention  of  the  parties  and  upon  the  rights 
granted  upon  the  one  side  and  the  obhgations  assmned 
upon  the  other.  ^  All  of  this  should,  of  course,  be  done 
fairly,  without  enlarging  rights  or  increasing  obligations 
and  with  the  sole  purpose  in  mind  of  enforcing  the  con- 
tract of  the  parties  and  not  of  making  a  new  contract 
for  them. 

Thus  the  manner  in  which  a  prior  contract  between 
the  same  parties  with  precisely  the  same  terms  as  the  one 
sued  upon  was  understood,  may  be  shown  for  the  purpose 
of  ascertaining  the  proper  execution  of  the  second  con- 
tract.^   It  will  not  be  supposed  that  contractors  agreed  to 

1  Carthage  T.  P.  Mills  v.  Carthage,  200  N.  Y.  1,  93  N.  E.  60. 

2  Burroughs  v.  Sch.  Dist.,  155  Wis.  426,  144  N.  W.  977. 

3  Walker  v.  U.  S.,  143  Fed.  685.  See  Bowers  Hyd.  D.  Co.  v.  U.  S.,  supra; 
State  ex  rel.  South  Bend  v.  Mountain  Spring  Co.,  56  Wash.  176,  105  Pac.  243. 

*  St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co.,  228  Mo.  712,  129  S.  W.  691;  Stover 
t;.  Springfield,  167  Mo.  App.  328,  152  S.  W.  122;  Douglass  v.  Morrisville,  89 
Vt.  393,  95  Atl.  810;  County  v.  Katz-Craig  Cent.  Co.,  181  Iowa,  1313,  165 
N.  W.  422. 

*  Bray  v.  U.  S.,  46  Ct.  CI.  132. 

296 


CHAP.  XXIX  ]  EXTRINSIC   CIRCUMSTANCES  [  §  194 

bear  losses  which  might  occur  by  reason  of  defects  in  a 
plan  imposed  upon  them  against  their  objections,  espe- 
cially when  such  defects  might  have  been  foreseen  and 
guarded  against  by  the  public  body  through  the  exercise 
of  ordinary  care  and  skill.  ^  Where  in  the  plans  and 
specifications  it  is  provided  to  build  a  dam  to  lines  and 
levels  and  in  another  place  to  build  it  upon  sohd  rock  and 
in  some  places  the  lines  and  levels  do  not  meet  solid  rock, 
evidence  to  determine  the  true  interpretation  of  the  con- 
tract may  be  resorted  to.^  Warrants  issued  by  public 
bodies  are  admissible  to  show  the  construction  which  the 
parties  themselves  placed  upon  the  contract  while  it  was 
being  performed  and  was  in  force.  ^  While  it  is  a  general 
rule,  that  the  construction  of  a  written  instrument  is  a 
question  of  law  for  the  court,'*  when  its  interpretation 
depends  upon  the  sense  in  which  the  words  were  used,  or 
the  sense  in  which  the  promisor  had  reason  to  believe  the 
promisee  understood  them,  or  depends  upon  facts  aliunde 
in  connection  with  the  written  language  to  ascertain  the 
intent  of  the  parties,  the  question  becomes  a  mixed  ques- 
tion of  law  and  fact,^  and  is  to  be  determined  by  a  jury.^ 
In  other  words,  when  in  the  construction  of  a  contract  a 
legal  principle  is  not  involved,  but  merely  a  determination 
as  to  whether  facts  presented  in  evidence  come  within  the 
provisions  of  the  contract,  legally  construed,  such  a  (Ijues- 
tion  of  construction  is  a  question  of  fact  to  be  determined 

1  Moore  v.  U.  S.,  46  Ct.  CI.  139. 

2  Douglass  V.  Morrisville,  supra. 

3  Mobile  County  v.  Linch,  198  Ala.  57,  73  So.  423. 

^  Trustees  of  Easthampton  v.  VaO,  151  N.  Y.  463,  45  N.  E.  1030;  Fellows  v. 
Dorsey,  171  Mo.  App.  289,  157  S.  W.  995;  Keefer  v.  Sunbury  School  Dist.,  203 
Pa.  St.  334,  52  Atl.  245. 

6  Trustees  of  Easthampton  v.  Vail,  151  N.  Y.  463,  45  N.  E.  1030. 

8  Norton  v.  Shields,  132  Fed.  873,  143  Fed.  802;  Kieburtz  v.  Seattle,  84 
Wash.  196,  146  Pac.  400. 

297 


§194]       contract:  construction,  operation    [  part  hi 

by  a  jury.^  But  evidence  under  this  rule  may  not  go  to 
the  extent  of  allowing  parties  to  prove  their  construction 
of  a  contract.^ 

§  195.  Subject-Matter  of  Contract — Scope  and  Extent  of 
Meaning — Conditions  at  Site. 
If  a  party,  for  a  sufficient  consideration,  agrees  to  erect 
and  complete  a  building  upon  a  particular  site  and  find 
all  the  materials,  and  do  all  the  labor,  his  agreement  is  to 
erect  and  complete.  No  matter  what  the  expense  he  must 
provide  such  a  substruction  as  will  sustain  the  building 
upon  that  spot,  until  it  is  complete  and  delivered  to  the 
pubHc  body.  If  it  cannot  be  erected  without  driving 
piles,  he  must  drive  them,  because  he  has  agreed  to  do 
everything  necessary  to  erect  and  complete.  If  the 
difficulties  are  apparent  on  the  surface,  he  must  overcome 
them.  If  they  are  not,  but  become  apparent  by  excava- 
tion or  sinking  the  building  or  structure,  the  rule  is  the 
same.  He  must  overcome  them  because  he  has  agreed  to 
do  so.  There  is  no  distinction  between  accidents  that 
could  be  foreseen  when  the  contract  was  made  and  those 
that  could  not,  between  accidents  by  the  fault  of  the 
contractor  and  those  where  he  is  wdthout  fault,  they  all 
rest  upon  the  simple  principle  that  where  his  promise  is 
absolute,  it  must  be  performed,  if  performance  be  not 
absolutely  impossible.^  Of  course,  each  case  depends  upon 
the  terms  of  the  contract  involved.  In  like  manner  where 
a  contractor  constructed  a  road  across  a  swamp  and 
agreed  to  keep  it  in  repair  for  a  year  and  after  the  road 
was  ffiiished  it  sank  from  its  new  grade,  by  reason  of  the 

1  Tomasek  v.  Edwardsville,  183  111.  App.  493;  Intemat.  Cont.  Co.  v.  U.  S., 
47  Ct.  CI.   158. 

2  Indep.  Sch.  Dist.  v.  Swearingen,  119  Iowa,  702,  94  N.  W.  206. 
» Trenton  v.  Bennett,  27  N.  J.  L.  513. 

298 


CHAP.  XXIX  ]  EXTRINSIC   CIRCUMSTANCES  [  §  195 

instability  of  the  ground,  he  is  required  to  restore  the  road 
to  the  grade  required  by  the  contract  without  additional 
compensation.     This   is   because   his   agreement   was   ab- 
solutely made  with  full  knowledge  of  the  existence  of  the 
swamp  or  of  all  the  facts  at  his  command,  and  when  his 
work  of  refilling  is  done  it  is  but  the  performance  of  his 
contract  for  which  he  received  the  agreed  price.  ^     Where, 
however,  under  such  a  contract  a  street  has  been  com- 
pleted and  accepted  and  the  street  sinks  and  there  is  no 
agreement  to  keep  in  repair,  the  contractor  is  not  bound 
to    again   fill   in   the   street.  ^     There   are   many   circum- 
stances which  change  such  a  result  as  where  representa- 
tions or  warranties  of  conditions  at  the  site  are  made  by 
the  public  body,  upon  which  the  contractor  has  the  right 
to  rely,  3  or  plans  showing  the  results  of  examinations  of 
the  site  are  made  the  basis  of  bids.''    Where  the  contractor 
agrees  to  clear  the  site  and  to  grade  the  surface  for  a 
specified  distance  around  the  building,  a  reasonable  con- 
struction requires  him  to  remove  any  high  ground  within 
the  foundation  walls,   and  he  cannot  allow  a  mound  to 
remain  in  the  center  of  the  site  higher  than  the  floor  of  the 
structure,  or  put  the  cost  of  its  removal  upon  the  public 
body.^    Where  the  plans  require  a  cellar  of  a  stated  depth, 
he  must  find  a  foundation  to  hold  the  building  even  if  to 
do  so  he  must  dig  deeper  than  the  cellar  level.^    Under  a 
contract  with  a  public  body  for  the  equipping  of  a  pier 

1  RUey  V.  Brooklyn,  46  N.  Y.  444.    See  Tompkins  v.  Dudley,  25  N.  Y.  272. 

2  Duncan  v.  Cordley,  199  Mass.  299,  85  N.  E.  160,  17  L.  R.  A.  n.  s.  697. 

3  Hollerbach  v.  U.  S.  233  U.  S.  165,  58  L.  Ed.  898;  U.  S.  v.  Atlantic  Dredging 
Co.,  253  U.  S.  1,  64  L.  Ed.  735;  U.  S.  v.  Spearin,  248  U.  S.  132,  63  L.  Ed.  166; 
Christie  v.  U.  S.,  237  U.  S.  234,  59  L.  Ed.  933;  Sexton  v.  Chicago,  107  111. 
323;  Long  v.  Athol,  196  Mass.  497,  82  N.  E.  665;  Bd.  of  Water  Comm'rs  v. 
Robbins,  82  Conn.  623,  74  Atl.  938. 

*  Faber  v.  New  York,  222  N.  Y.  255,  118  N.  E.  609. 
5  Fonder  v.  U.  S.,  48  Ct.  CI.  198. 

*  Trenton  v.  Bennett,  supra. 

299 


§195]       contract:  construction,  operation    [  part  hi 

by  which  the  pubhc  body  agreed  to  build  hatchways  and 
to  select  a  pattern  of  elevators,  if  alterations  in  the  hatch- 
ways became  necessaiy  to  permit  the  elevators  approved 
by  the  public  body  to  be  operated  therein,  the  obliga- 
tion rested  on  the  latter  to  make  such  alterations  rather 
than  the  contractor.^  Subsidence  of  soil  at  the  site  is 
ordinarily  assumed  by  one  who  undertakes  to  erect  a 
structure  upon  a  particular  site,-  but  not  unforseen  condi- 
tions due  to  the  fault  of  the  public  body,  through  its  neg- 
ligent omission  to  repair  its  ovv-n  structures  at  the  site.^ 
He  has  the  right  to  assume  that  a  means  existing  to 
perfonn  some  work  in  connection  with  the  contract  will 
be  in  working  order  and  will  operate  to  do  what  is  ex- 
pected of  it.^  And  when  such  an  instrumentality  is 
required  to  be  built  at  the  site,  the  contractor  who  builds 
it  has  the  right  to  expect  it  to  be  sufficient  to  accomplish 
the  purpose  at  the  site  for  which  it  is  provided.^ 

§  196.  Representations  of  Fact  as  to  Conditions  of  Work 
under  Contract — Person  Making  Them  Bound 
and  Must  Bear  Loss. 
Where  a  contract  or  specifications  forming  part  of  it 
speak  with  certainty  as  to  a  part  of  the  conditions  or  the 
substance  or  character  of  materials  to  be  encountered  in 
the  course  of  the  performance  of  the  work,  the  public  body 
is  bound  thereby.     If  the  public  body  by  these  writings 
assures  the  contractor  of  the  character  or  nature  of  condi- 
tions or  materials,  such  will  be  presumed  to  be  a  matter 

1  North  Eastern  Cons.  Co.  v.  New  York,  217  N.  Y.  320,  112  N.  E.  5-3. 

2  Simp.son  v.  U.  S.,  172  U.  S.  372,  43  L.  Ed.  482,  aflf'g  31  Ct.  CI.  217;  Der- 
mott  V.  Jones,  2  Wall.  (U.  S.)  1,  17  L.  Ed.  762;  U.  S.  v.  Spearin,  248  U.  S.  132, 
63  L.  Ed.  166. 

'  Sundstrom  v.  State,  213  N.  Y.  68,  106  N.  E.  924. 
*  Horgan  v.  New  York,  160  N.  Y.  516,  55  N.  E.  204. 
5  U.  S.  V.  Spearin,  248  U.  S.  132,  63  L.  Ed.  166. 

300 


CHAP.  XXIX  ]  EXTRINSIC    CIRCUMSTANCES  [  §  196 

concerning  which  it  speaks  with  knowledge  and  authority/ 
Such  positive  assertions  of  the  nature  or  condition  of  the 
work  are  representations  upon  which  a  contractor  has  a 
right  to  rely  without  an  investigation  to  prove  their  falsity, 
and  this  is  true  although  there  may  be  general  language  in 
portions  of  the  contract  requiring  an  independent  investi- 
gation of  the  facts.-  When  loss  results  from  representa- 
tions which  prove  mistaken,  these  positive  statements  of 
fact  must  be  taken  as  true  and  binding  upon  the  public 
body,  and  accordingly  such  loss  must  be  borne  by  it  rather 
than  by  the  contractor.^  Where  the  matters  set  out 
do  not  amount  to  representations  and  the  burden  is 
put  upon  the  contractor  by  the  contract  he  must 
take  the  burdens  which  he  thus  assumes.^  Where  the 
contractor  has  been  misled  by  erroneous  statements 
in  the  specifications  he  may  have  relief  in  equity.^ 
In  a  contract  to  reconstruct  a  building  partially  destroyed 
by  fire,  where  the  contract  called  for  the  uninjured  parts 
to  remain  and  the  government  actually  stripped  and  dis- 
mantled the  burnt  building,  what  was  left  standing  con- 
stituted under  the  circumstances  a  representation  that  it 

1  Hollcrbach  v.  U.  S.,  233  U.  S.  165,  58  L.  Ed.  898;  U.  S.  v.  Atlantic  Dredging 
Co.,  253  U.  S.  1,  64  L.  Ed.  735;  U.  S.  v.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI. 
119;  Christie  v.  U.  S.,  237  U.  S.  234;  Y.  S.  v.  Spearin,  248  U.  S.  132,  63  L.  Ed, 
166;  Dd.  of  Water  Comm'rs  v.  Bobbins,  82  Conn.  623,  74  Atl.  938;  Sexton  v. 
Chicago,  107  III.  323;  Long  v.  Athol,  196  Mass.  497,  82  N.  E.  665;  Faber  v. 
New  York,  222  N.  Y.  255,  118  N.  E.  609;  Horgan  v.  New  York,  160  N.  Y. 
516,  55  N.  E.  204;  King  v.  Duluth,  78  Minn.  155,  80  N.  W.  874;  Capital  City 
B.  &  P.  Co.  V.  Des  Moines,  136  Iowa,  243,  113  N.  W.  835. 

2  HoUerbach  v.  U.  S.,  supra.  U.  S.  v.  Spearin,  supra,  Long  v.  Athol,  supra, 
U.  S.  V.  Atlantic  Dredging  Co.,  supra. 

'  HoUerbach  v.  U.  S.  supra.  Sexton  v.  Chicago,  supra.  Bd.  of  Water 
Comm'rs  v.  Robbins,  supra. 

*  Rowe  V.  Peabody,  207  Mass.  226,  93  N.  E.  604;  Semper  v.  Duffey,  227 
N.  Y.  151,  124  N.  E.  743;  Simpson  v.  U.  S.,  172  U.  S.  372,  43  L.  Ed.  482,  aff'g 
31  Ct.  CI.  217;  Callahan  Con.  Co.  v.  U.  S.,  47  Ct.  CI.  177;  Lewman  v.  U.  S. 
41  Ct.  CI.  470;  Foubnation  Co.  v.  State,  193  N.  Y.  App.  Div.  513. 

*  U.  S.  V.  Utah  &c.  Stage  Co.  Co.,  199  U.  S.  414,  424,  50  L.  Ed.  251,  aff'g  39 
Ct.  CI.  420;  Long  v.  Athol,  supra. 

301 


§196]       conteact:  construction,  operation    [  part  hi 

had  been  adjudged  so  far  uninjured  that  it  was  to  remain, 
upon  the  faith  of  which  a  contractor  might  rely  in  making 
his  estimate.^  But  a  contractor  may  not  rely  upon  repre- 
sentations or  expressions  of  opinion  made  by  an  engineer, 
aior  may  he  rely  upon  the  knowledge  or  conduct  of  individ- 
ual members  of  a  board.  Neither  the  engineer  nor  the 
indi\adual  members  can  bind  the  public  body.  It  is  repre- 
sented only  by  its  entire  board,  not  by  the  individuals  who 
compose  the  board,  and  can  only  be  bound  by  the  action 
of  the  board  directly  or  through  agents  empowered  to  act 
or  speak  for  it.^ 

1  U.  S.  V.  Gibbons,  109  U.  S.  200,  27  L.  Ed.  906,  aff'g  15  Ct.  CI.  174. 
« San.  Dist.  of  Chicago  v.  Ricker,  91  Fed.  833. 


302 


CHAPTER  XXX 

PRIVITY  OF  CONTRACT 

§  197.  Who  may  Enforce — Contract  for  Benefit  of  Third 
Persons. 

One  who  is  a  stranger  to  a  contract,  to  its  consideration 
and  obligations,  has  no  right  to  enforce  it.  He  can  neither 
claim  a  benefit  nor  sustain  a  habihty  under  it.^  Such  was 
the  rule  of  the  common  law.  A  more  hberal  modern  rule 
provides  that  where  a  contract  is  made  between  two  per- 
sons upon  a  valuable  consideration  whereby  a  third  person 
is  to  be  paid  money  or  receive  some  benefit  such  third 
person  may  enforce  the  contract  although  not  named 
therein. 2  But  to  entitle  such  third  person  to  recover  it  is 
necessary  that  the  contract  should  have  been  entered  into 
for  his  benefit,  and  if  it  appears  from  the  terms  used  that 
the  contract  was  solely  for  the  benefit  of  the  parties 
thereto,  third  persons  cannot  recover  under  its  provisions.^ 
Although  the  distinction  was  formerly  made  only  in  favor 
of  a  simple  contract,  the  rule  now  is  that  the  doctrine 
applies  to  written  agreements  under  seal,  even  though  the 

»  Evans  v.  U.  S.,  42  Ct.  CI.  287;  St.  Louis  v.  Wright  Cont.  Co.,  202  Mo.  451, 
101  S.  W.  6. 

2  Coster  V.  Mayor,  43  N.  Y.  399,  411;  Little  v.  Banks,  85  N.  Y.  258;  Smyth 
V.  New  York,  203  N.  Y.  106,  96  N.  E.  409;  Bradley  v.  McDonald,  218  N.  Y. 
351,  361,  113  N.  E.  340;  Rigney  v.  N.  Y.  C.  &  H.  R.  Co.,  217  N.  Y.  31,  111 
N.  E.  223;  Pond  v.  New  Rochelle  W.  Co.,  183  N.  Y.  330,  76  N.  E.  211;  Schnaier 
V.  Bradley  Cont.  Co.,  181  N.  Y.  App.  Div.  538;  Searles  v.  Flora,  225  111. 
167,  80  N.  E.  98;  Albin  Co.  v.  Comm.,  128  Ky.  295,  108  S.  W.  299;  St.  Louis 
V.  Von  Phul,  133  Mo.  565,  34  S.  W.  843;  St.  Louis  v.  Wright  Cont.  Co.,  202 
Mo.  451,  101  S.  W.  6;  Gorrell  v.  Greensboro  W.  S.  Co.,  124  N.  C.  328,  32  S.  E. 
720;  Nashville  v.  Toney,  10  Lea  (Tenn.).  643. 

'  Searles  v.  Flora,  supra;  Decatur  v.  Jaudon,  136  Ga.  854,  72  S.  E.  351; 
St.  Louis  V.  Wright  Cont.  Co.,  202  Mo.  451,  101  S.  W.  6. 

303 


§197]       contract:  construction,  operation    [part  hi 

third  person  is  not  privy  to  the  consideration.^  To 
apply  this  doctrine,  in  the  case  of  residents  of  a  city 
under  a  pubUc  contract  made  by  a  municipahty  with  its 
"Contractor,  it  should  appear,  that  there  was  an  intent  on 
the  part  of  the  municipality  to  secure  some  benefit  to 
its  residents  and  further,  that  there  was  some  obhgation 
or  duty  owing  from  the  municipahty  to  the  resident,  which 
gives  the  latter  a  legal  or  equitable  claim  to  the  benefit 
of  the  contract,  and  which  makes  him  in  privity  with  the 
municipahty  so  as  to  enable  him  to  bring  his  action  against 
the  contractor,^  Where  a  contract  between  a  city  and  a 
railroad  company  contained  a  covenant  that  the  latter 
would  pay  damages  resulting  to  any  person  or  property 
from  the  work  to  be  done,  including  damages  resulting 
from  change  of  grade  of  the  street,  which  it  would  pay  at 
its  own  expense  and  assume  such  hability,  the  intent  on 
the  part  of  the  municipahty  to  benefit  abutting  property  is 
clear.  The  words  can  be  read  in  no  light  but  to  show  an 
intent  that  the  railroad  should  pay  change  of  grade  dam- 
ages and  these  could  only  relate  to  those  whose  property 
abutted  the  work.  The  obligation  or  duty  essential  to 
exist  between  the  municipality  and  the  landowner  arises 
from  the  fact  that  the  municipality  is  under  some  obhga- 
tion to  protect  its  inhabitants  and  when  it  enters  into  a 
contract  for  public  work,  which  may  result  in  damage  to 
one  of  such  inhabitants,  for  which  otherwise  he  would  be 
without  a  remedy,  the  municipality  may  require  the  con- 
tractor to  compensate  the  person  injured.^ 

1  Coster  V.  Albany,  supra;  Rigney  v.  N.  Y.  C.  &  H.  R.  Co.  supra;  Pond 
V.  New  Rochelle  W.  Co.,  supra. 

*  Smyth  V.  New  York,  supra;  Rigney  v.  N.  Y.  C.  &  H.  R.  Co.,  supra; 
Schnaier  i;.  Bradley  Cont.  Co.,  supra. 

'  Rigney  t;.  N.  Y.  C.  &  H.  R.  Co.,  supra;  Schnaier  v.  Bradley  Cont.  Co., 
supra. 

304 


CHAP.  XXX  ]  PRIVITY   OF   CONTRACT  [  §  197 

In  like  manner  the  contractor  with  the  city  for  construc- 
tion of  the  first  subway  in  New  York  was  held  liable  for 
the  negligence  of  a  subcontractor  which  caused  the  explo- 
sion of  a  dynamite  magazine  and  destroyed  part  of  the 
Murray  Hill  Hotel,  under  a  clause  which  made  the  princi- 
pal contractor  liable  for  all  damages  done  to  abutting 
property  resulting  from  negligence  during  the  performance 
of  the  work.^  Similarly  where  a  water,  light  or  railroad 
company  in  consideration  of  the  right  to  lay  and  maintain 
its  water,  Hght  or  rail  lines  through  the  streets  of  a  munic- 
ipality, enters  into  a  contract  to  furnish  the  public  serv- 
ice undertaken  at  a  rate  not  to  exceed  a  sum  stated,  an 
individual  resident  may  have  an  injunction  restraining  the 
company  from  enforcing  collection  of  a  rate  in  excess  of 
that  fixed  by  the  contract.^  Where  the  provisions  of  a 
pubHc  contract  which  impose  upon  the  contractor  respon- 
sibility for  all  damages  is  merely  a  contract  of  indemnity, 
to  save  the  public  body  harmless,  no  action  upon  such  a 
contract  or  its  covenants  may  be  maintained  by  third 
persons  who  otherwise  would  have  no  cause  of  action.^ 

1  Smyth  V.  New  York,  supra. 

2  Pond  V.  New  Rochelle  W.  Co.,  supra. 

» Corrigan  Trans.  Co.  v.  Sanitary  Dist.,  125  Fed.  611,  137  Fed.  851. 


305 


CHAPTER  XXXI 

QUALITY  OF  CONTRACT 

§  198.  Joint  and  Several  Contracts. 

An  obligation  entered  into  by  more  than  one  person  is 
presumed  to  be  joint,  and  a  several  responsibility  will  not 
arise,  except  by  words  of  severance.^  But  a  contract  may 
not  be  joint  when  interpreted  with  reference  to  the  nature 
of  the  work.  Where  a  contract  does  not  require  a  public 
body  to  place  curbstones  around  all  the  trees  upon  a 
street,  its  terms  cannot  be  construed  as  requiring  that  the 
entire  work  proposed  should  be  finished  as  a  condition 
precedent  to  the  right  to  recover  of  any  abutter  for  the 
work  done,  against  his  premises.^ 

§  199.  Entire  or  Severable  Contracts. 

There  is  no  general  rule  which  can  be  formulated  and 
applied  in  every  case  to  determine  whether  a  contract  is 
entire  or  severable.  Like  other  questions  of  construction, 
it  is  one  to  be  determined  by  the  intention  of  the  parties 
as  gathered  from  the  light  shed  by  the  surrounding  cir- 
cumstances. 

Some  of  the  tests  suggested  are  whether  the  considera- 
tion is  single  or  is  capable  of  apportionment,  and  whether 
the  work  is  single  or  divisible.^    It  is  no  doubt  the  general 

1  Phila.  V.  Reeves,  48  Pa.  St.  472;  Henry  v.  Mt.  Pleasant  Tp.,  70  Mo.  500; 
New  Orleans  v.  Ripley,  5  La.  122,  25  Am.  D.  175.  See  Geer  v.  Tenth  Sch. 
Dist.,  6  Vt.  76;  U.  S.  v.  Price,  9  How.  (U.  S.)  83,  13  L.  Ed.  56. 

2  Springfield  v.  Harris,  107  Mass.  532. 

'  Chicago  V.  Sexton,  115  111.  230,  2  N.  E.  263;  Coburn  v.  Hartford,  38  Conn. 
290;  Bridgeport  v.  Scott  Co.,  94  Conn.  461,  109  Atl.  162;  McCauley  t;.  Brooks^ 

306 


CHAP.  XXXI  ]  QUALITY  OF   CONTRACT  [  §  200 

rule  that  where  the  considerations  moving  from  each  party 
to  the  other  are  practically  concurrent,  the  contract  is 
indivisible,  and  a  failure  by  the  public  body  to  pay  the 
consideration  is,  therefore,  a  bar  to  an  action  for  not 
rendering  the  service  which  the  contractor  is  obligated  to 
render  under  the  contract,  when  the  action  is  brought  by 
the  party  failing  to  pay.^ 

§  200.  Entire    and    Severable    Contracts — Divisibility    of 
Consideration  Determining. 

So,  where  the  compensation  for  the  whole  job  of  repair- 
ing a  bridge  is  to  be  determined  by  the  amount  of  lumber 
wrought  into  the  bridge,  the  contract  is  entire.^  Again, 
where  the  contract  is  to  pay  weekly  estimates  only  when 
the  work  progresses  in  accordance  with  the  contract,  a 
contractor  who  encounters  difficulties  in  loose  soil  may  not 
stop  this  work  and  go  on  with  rock  excavation  and  recover. 
Such  a  contract  is  indivisible,  which  must  be  performed 
or  broken  as  a  whole,  and  the  fact  that  pajonents  are  to  be 
made  in  installments  will  not  of  itself  make  the  contract 
severable.^  A  contract  to  pay  when  the  contract  shall 
be  wholly  carried  out,  completed  and  accepted,  the  subject 
of  which  is  to  furnish,  deliver,  set  and  fix  complete  all 
the  iron  work  in  a  city  hall,  is  not  divisible,  merely  because 
the  amount  to  be  paid  is  made  up  by  stating  the  estimated 
cost  of  each  story  separately  and  the  roof,  and  then  adding 
the  whole  together.  If  there  is  nowhere  an  agreement  to 
receive  and  pay  for  the  work  by  stories,  but  on  the  con- 

16  Cal.  11;  Young  t;.  Chicopee,  186  Mass.  518,  72  N.  E.  63;  Nat.  Cont.  Co.  v. 
€omm.,  183  Mass.  89,  66  N.  E.  639;  U.  S.  Trust  Co.  v.  Guthrie  Center,  181 
Iowa,  992,  165  N.  W.  188.    See  Quigley  v.  County  of  Sumner,  24  Kan.  293. 

1  State  ex  rel.  South  Bend  v.  Mountain  Spring  Co.,  56  Wash.  176,  105  Pac. 
-243. 

«  Young  V.  Chicopee,  186  Mass.  518,  72  N.  E.  63. 

>  National  Cont.  Co.  v.  Comm.,  183  Mass.  89,  66  N.  E.  639. 

307 


§  200  ]  CONTRACT :   CONSTRUCTION,    OPERATION      [  PART  III 

iTn.vy  the  pajTnent  is  to  be  made  of  the  aggregate  amount 
wheii  the  contract  is  wholly  carried  out,  the  contract  is 
entire.^  Where  the  method  of  payment  or  the  severance  of 
items  of  price  or  work  amount  to  an  apportionment  of  the  con- 
sideration to  separate  portions  of  the  contract,  this  will 
make  the  contract  severable. ^  When  a  contract  is  for  an 
entire  term  of  five  years,  the  payments  by  the  State  to  be 
made  in  monthly  installments,  and  the  consideration  con- 
sists not  merely  of  these  payments,  but  of  many  improve- 
ments to  be  made,  the  contract  is  incapable  of  apportion- 
ment, and  the  contract  is  entire.^  If  a  contract  is  to  erect 
a  schoolhouse  and  the  contract  price  is  payable  in  install- 
ments as  the  work  progresses,  such  a  division  is  made,  not 
to  apportion  the  price  to  different  parts  of  the  work,  but 
to  meet  the  wants  of  and  aid  the  contractor  in  completing 
the  work.  It  is  not  intended  to  sever  the  entirety  of  the 
contract  and  make  the  payment  of  the  installments,  pay- 
ments for  such  parts  of  the  work,  as  might  be  done  when 
they  were  payable.  The  consideration  of  the  covenant  to 
complete  is  the  whole  price  and  a  contractor  cannot,  there- 
fore, after  payment  of  part  of  the  installments,  refuse  to 
go  on  and  complete  and  yet  retain  that  part  of  the  price 
he  has  received.^ 

§  201.  Entire  and  Severable  Contracts — Divisibility  of 
Work  or  Objects  of  Contract  as  Determining. 
Where  a  contract  consists  of  three  separate  items  of 
employment,  the  validity  of  the  latter  two  of  which  de- 
pends upon  the  adoption  of  preliminary  plans  and  the  vot- 
ing of  bonds  or  the  raising  of  funds  by  some  other  methods 

1  Chicago  V.  Sexton,  115  111.  230,  2  N.  E.  263. 

2  State  V.  Scoggin,  10  Ark.  326. 

'  McCauley  v.  Brooke,  16  Cal.  11,  38. 

*  Trenton  v.  Bennett,  27  N.  J.  L.  513;  Tompkins  v.  Dudley,  25  N.  Y.  272. 

308 


CHAP.  XXXI  ]  QUALITY   OF   CONTRACT  [  §  202 

for  the  construction  of  a  waterworks  system,  the  contract 
is  divisible,  the  latter  part  being  dependent  upon  terms 
and  conditions  which  never  became  effective.^  If  a  con- 
tract is  made  for  the  preparation  of  plans  and  specifica- 
tions and  for  superintending  the  erection  of  a  building 
and  one  sum  is  to  be  paid  for  the  entire  service,  this  is  an 
entire  contract  in  object  and  price  covering  all  of  these 
services.-  Where  a  contract  provides  for  the  construction 
of  several  objects  of  work,  and  there  is  but  one  written 
instrument  covering  all  the  undertakings,  if  it  sets  forth 
several  contracts,  each  of  which  relates  to  each  undertaking 
or  one  contract  covering  several  independent  and  separable 
subjects,  it  may  be  held  good  as  to  some  and  invahd  as 
to  others.^  But  where  the  performance  of  several  items 
of  work  cannot  be  enforced  because  the  contract  as  to  them 
is  invalid,  and  the  contract  is  indivisible,  no  part  of  the 
contract  can  be  separately  enforced.^  Where  covenants 
are  severable  they  are  enforceable.  A  covenant  to  supply 
free  water  to  a  house  is  no  longer  binding  if  the  house  is  so 
enlarged  as  to  lose  its  identity  and  the  measure  of  what 
would  be  a  reasonable  supply  is  no  longer  ascertainable. 
But  a  similar  covenant  to  supply  a  reasonable  amount  of 
free  water  to  farm  buildings  is  severable  and  enforceable.^ 

§  202.  Entire  and  Severable  Contracts — Estoppel. 

Where  by  his  own  act  a  contractor  places  the  construc- 
tion of  divisibility  upon  a  contract  and  operates  under  such 
a  construction  for  many  years,  he  will  be  estopped  from 

1  Tecumseh  v.  Burns,  30  Okla.  503,  120  Pac.  270. 

2  Spalding  County  v.  Chamberlin,  130  Ga.  649,  61  S.  E.  533. 

» Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219;  Uvalde  A.  P,  Co.  v.  New 
York,  128  App.  Div.  210,  198  N.  Y.  548,  92  N.  E.  1105. 
*  Ness  V.  Board  of  Comm'rs,  178  Ind.  221,  98  N.  E.  33. 
6  Hadham  Rural  Council  v.  Crallan,  83  L.  J.  Ch.  717. 

309 


§  202]        contract:  construction,  operation     [  part  hi 

pleading  its  indivisibility,  and  he  cannot  claim  the  benefit 
of  that  portion  of  the  contract  which  subserves  his  interest 
and  repudiate  tlmt  portion  which  provides  for  the  perform- 
ance of  a  duty  on  his  part.^ 

1  State  ex  rel.  South  Bend  v.  Mountain  Spring  Co.,  56  Wash.  176,  105  Pac. 
243. 


310 


CHAPTER  XXXII 

COVENANTS  AND  CONDITIONS 

§  203.  Dependent  and  Independent  Covenants. 

Whether  a  covenant  is  a  dependent  or  an  independent 
covenant  must  be  determined  according  to  the  meaning 
and  intention  of  the  parties  to  it.^  This  intention  must  be 
gathered  from  the  contract  according  to  the  ordinary  rules 
of  construction,  and  one  of  the  infaUible  tests  is  whether  or 
not  a  breach  can  be  compensated  for  in  damages.  If  it 
can  be,  then  the  covenants  are  held  to  be  independent  and 
a  party  must  pay  for  what  he  receives  under  the  contract, 
but  may  recoup  the  damages  he  has  suffered  by  a  breach 
upon  the  part  of  the  other  party.  If  a  breach  cannot  be 
compensated  for  in  damages,  then  the  covenants  are  de- 
pendent, and  must  of  necessity  be  so,  else  there  could  be 
no  remedy  at  all.  Where  it  is  therefore  the  intention  to 
rely  upon  a  provision  for  performance  and  not  on  a  remedy 
for  non-performance,  then  performance  is  a  condition  pre- 
cedent, and  must  be  shown  before  recovery  can  be  had 
upon  the  contract.  ^  If  the  intent  of  the  parties  is  that 
performance  by  the  public  body  shall  be  conditioned  on 
performance  by  the  contractor,  the  covenants  are  independ- 
ent.    Where  a  franchise  was  granted  upon  condition  that 

1  Curran  Print.  Co.  v.  St.  Louis,  213  Mo.  22,  111  S.  W.  812;  Daly  v.  Carthage 
143  Mo.  App.  564,  128  S.  W.  265;  Quinlan  v.  Green  County,  157  Fed.  33,  1& 
L.  R.  A.  N.  s.  857,  aff'd  211  U.  S.  582,  53  L.  Ed.  335;  Wiley  v.  Athol,  150  Mass. 
426,  23  N.  E.  311. 

'  Daly  V.  Carthage,  supra. 

311 


§  203  ]  CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

certain  enlargements  and  improvements  of  a  water  system 
should  be  made,  the  covenant  is  dependent,  cannot  be 
compensated  in  damages  and  no  recovery  can  be  had  for 
water  fm'nished  until  its  performance.^  But  where  a  water 
company  agreed  to  furnish  water  of  a  certain  pressure,  this 
pro\'ision  must  be  considered  as  an  independent  collateral 
covenant  which  it  was  not  necessary  to  prove  was  per- 
formed to  entitle  a  recovery.  The  furnishing  of  water  was 
the  principal  thing,  to  which  everything  else  is  subordinate 
under  such  a  covenant,  and  if  the  principal  covenant  or 
guaranty  is  not  performed,  the  public  body  may  recoup 
any  damages  which  it  suffers  by  reason  of  defective  per- 
formance.- The  requirement  that  a  bond  shall  be  given 
for  the  faithful  performance  of  a  contract,  to  be  approved 
by  the  comptroller  and  mayor  of  a  city,  in  the  absence  of 
provision  in  the  ordinance  showing  it  to  be  a  condition 
precedent,  is  a  mutual  and  independent  covenant,  and 
where  a  good  and  sufficient  bond  is  tendered  and  approved 
by  the  comptroller,  but  the  mayor  refuses  to  approve,  the 
cancellation  of  his  name  by  the  comptroller  upon  the  con- 
tract is  nugatory  and  the  contract  is  complete  without  the 
mayor's  approval.^  Where  a  purchaser  of  lands  from  a  county 
engaged  to  introduce  certain  settlers  within  a  certain  time  and 
made  certain  engagements  as  to  reclaiming,  and  the  perform- 
ance of  these  was  not  made  a  condition  but  rested  in  cove- 
nant, the  agreement,  although  a  part  of  the  consideration  of 
the  contract,  is  independent,  and  non-performance  raises  an 
action  merely  and  will  not  annul  the  entire  contract.  It 
is,  therefore,  only  where  covenants  are  mutual  and  depend- 
ent that  the  failure  of  one  party  to  perform  absolves  the 

'  Daly  V.  Carthage,  supra. 

2  Wiley  t;.  Athol,  150  Mass.  426,  23  N.  E.  311.    See  Comanche  v.  Hoff, 
170  S.  W.  (Tex.)  135. 

'  Curran  Print.  Co.  v.  St.  Louis,  supra. 

312 


CHAP.  XXXII  ]         COVENANTS   AND   CONDITIONS  [  §  204 

other  and  authorizes  hun  to  rescind  the  contract.^  Where 
a  railroad  company  contracts  with  a  municipahty  in  con- 
sideration of  permission  to  use  its  streets  to  keep  the 
space  between  the  tracks  in  repair  under  the  direction  of 
such  competent  authority  as  the  common  council  might 
designate,  the  failure  of  the  common  council  to  make  the 
designation  is  not  an  indispensable  prerequisite  to  the  per- 
formance of  such  covenant.  It  is  not  a  condition  prece- 
dent, but  a  mere  reservation  of  a  right  of  supervision.^ 
Where  in  a  contract  a  city  undertakes  as  a  fundamental, 
single  and  indivisible  agreement  to  deliver  all  its  ashes, 
rubbish  and  street  sweepings  from  a  certain  territory  at 
fourteen  specified  dumps  with  picking  privileges,  and  in 
return  for  which  the  contractor,  by  like  single  and  indivis- 
ible agreement,  promises  to  perform  labor  at  the  entire 
collection  of  dumps  and  make  payment  for  the  privilege  in 
an  undivided  sum  of  money,  one  agreement  in  its  entirety 
is  the  foundation  for  and  consideration  of  the  other. 
When  the  city  fails  to  furnish  four  out  of  the  fourteen 
dumps,  the  city  commits  a  material  breach  of  its  contract. 
The  default  is  not  of  a  covenant  which  is  incidental, 
inconsequential  or  subordinate,  but  of  a  mutual  and  de- 
pendent covenant  which  lies  at  the  basis  of  the  entire 
agreement,  goes  to  its  entire  consideration,  affects  the 
contractor's  entire  obligation  thereunder  and  gives  him 
a  right  of  rescission.^ 

§  204.  Conditions  Precedent  and  Subsequent. 

The  question  whether  the  performance  of  a  stipulation 
in  a  contract  is  a  condition  precedent  to  the  performance 
of  other  stipulations  in  it,  depends  upon  the  order  in  which 

1  Emigrant  Co.  v.  County  of  Adams,  100  U.  S.  61,  25  L.  Ed.  563. 

2  Brooklyn  v.  Brooklyn  City  R.  R.  Co.,  47  N.  Y.  475. 

» Clarke  Cont.  Co.  v.  New  York,  229  N.  Y.  413,  128  N.  E.  241. 

313 


§  204  ]  CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

the  parties  intend  the  several  stipulations  to  be  performed. 
Calling  stipulations  conditions  is  not  conclusive.  If,  from 
the  contract  or  other  circumstances,  it  appears  that  it  was 
not  the  intention  of  the  parties  to  make  their  performance, 
conditions  precedent,  they  will  not  be  considered  such.^ 
Conditions  are  not  favored,  and  a  provision  will  not  be 
construed  to  be  a  condition,  unless  the  intention  to  make  it 
such  is  manifest.  The  judicial  inclination  is  to  construe 
the  language  of  an  agreement  as  a  covenant  if  it  can  be  so 
resolved.-  The  destructive  results,  which  follow  a  con- 
struction that  particular  language  constitutes  a  condition, 
will  not  be  permitted  unless  the  essential  features  of  a  con- 
dition appear.^  Acceptance  of  a  contract  is  acceptance  of 
its  conditions  whether  a  party  expressly  binds  himself  to 
them  or  not.^ 

A  conditional  contract  is  one,  the  performance  of  which, 
depends  on  a  condition.  Whether  a  given  stipulation  is  to 
be  considered  a  condition  precedent,  a  condition  subse- 
quent, or  an  independent  agreement,  is  purely  a  question 
of  intent  to  be  determined  by  examining  not  only  the 
words  of  the  particular  clause,  but  also  the  language  of 
the  whole  contract,  as  well  as  the  nature  of  the  act  re- 
quired to  be  done  and  the  subject-matter  to  which  it  re- 
lates.^ No  particular  form  of  words  is  necessary  to  create 
the  condition.  It  is  likewise  a  difficult  question  oftentimes 
to  decide  whether  a  stipulation  is  a  covenant  or  a  condi- 
tion. The  difference  relates  largely  to  the  remedy.  If  the 
breach  of  a  contract  pertains  to  the  validity  of  the  instru- 

1  Quinlan  v.  Green  County,  157  Fed.  33,  19  L.  R.  A.  n.  s.  857,  aff'd  211 
U.  S.  582,  53  L.  Ed.  335. 

2  Idem. 
'Idem. 

*  Storm  V.  U.  S.,  94  U.  S.  76,  24  L.  Ed.  42;  Quinlan  «;.  Green  County,  supra, 
'  Quinlan  v.  Green  County,  supra;  Bucksport  &  B.  R.  Co.  v.  Brewer,  67 
Me.  295;  Skowhegan  W.  Co.  v.  Skowhegan,  102  Me.  323,  66  Atl.  714. 

314 


CHAP.  XXXII  ]         COVENANTS  AND   CONDITIONS  [  §  204 

merit  or  is  a  ground  for  forfeiture,  it  is  a  condition.  On 
the  other  hand,  if  the  remedy  for  the  breach  is  merely  an 
action  for  damages,  the  stipulation  breached  is  a  covenant. 
The  breach  of  a  covenant  is  not  ground  for  termination. 
A  party  must  perform,  and  sue  later  for  damages  for 
breach  of  the  covenant.^ 

A  contract  to  supply  street  lamps,  connect  them  with 
necessary  gas  mains,  and  supply  the  necessary  gas  for 
street  lighting  was  affected  by  an  order  made  under  the 
Defense  of  the  Realm  Act  restricting  lighting  and  later 
extinguishing  all  lighting.  Where  the  contract  price  was 
an  annual  sum  per  lamp  it  was  impossible  to  allocate  pay- 
ments to  these  respective  items.  Since  the  order  did  not 
make  lighting  permanently  unlawful,  or  the  contract 
absolutely  impossible  of  performance,  the  supplying  of  gas 
could  not  be  held  to  be  a  condition  precedent  to  the  right 
of  the  company  to  recover  the  payments  provided  by  the 
contract.^  While  sometimes  the  words  ''upon  condition," 
''provided  that,"  "so  that"  and  other  like  phrases,  may  be 
helpful  in  determining  whether  particular  language  imports 
a  condition,^  they  are  not  conclusive.^ 

1  Daly  V.  Carthage,  143  Mo.  App.  564,  128  S.  W.  265;  Wiley  v.  Athol,  150 
Mass.  426,  23  N.  E.  311. 

2  Leiston  Gas  Co.  v.  Leiston-cum-Sizewell  Urban  Council,  85  L.  J.  K.  B. 
1759.  See  Metropolitan  Water  Board  v.  Dick,  87  L.  J.  K.  B.  370,  aff'g  86 
L.  J.  K.  B.  675,  for  the  effect  upon  the  contract  where  a  like  order  made  the 
contract  unlawful. 

'  Curran  Printing  Co.  v.  St.  Louis,  213  Mo.  22,  111  S.  W.  812. 

*  Green  County  v.  Quinlan,  211  U.  S.  582,  53  L.  Ed.  335,  aff'g  157  Fed.  33, 
19  L.  R.  A.  N.  8.  857;  Bell  v.  Boston,  101  Mass.  506.  See  Mercer  County  v. 
Coovert,  6  Watts  &  S.  70;  State  v.  Collina,  6  Ohio,  126. 


315 


CHAPTER  XXXIII 

TIME  IN  CONTRACT 

§  205.  Time  of  Performance. 

If  a  contract  is  silent  as  to  the  time  of  performance  or 
pajTiient,  the  law  impUes  that  a  reasonable  time  was 
intended.^ 

§  206.  Duration  of  Contract. 

Where  contracts  are  made  by  ordinance,  for  a  named 
period,  as  for  example,  a  contract,  designating  a  paper  for 
the  publication  of  legal  notices,  and  the  publication  con- 
tinues after  such  period  the  contract  is  vaHd.  If  it  does 
not  appear  that  the  designation  was  revoked,  or  the 
employment  terminated,  the  presumption  is  that  the  em- 
ployment continues.  Until  rescinded  in  terms  the  resolu- 
tion lasting  as  an  expression  of  determination  to  have  its 
work  done  at  certain  rates  and  as  to  all  but  the  party,  is 
pei-petual  until  rescinded  by  action  of  the  city.  Its  con- 
tinuance beyond  the  named  period  gives  a  valid  basis  to 
constitute  a  binding  continuing  contract.  ^ 

If  there  is  no  hint  at  any  limitation  of  time  in  a  grant 
but  the  public  body  grants  all  the  right  and  authority 
that  it  has  the  capacity  to  grant,  to  a  railroad,  lighting, 
water,  telephone  or  other  public  service  company  to  con- 
struct, hold  and  operate  its  lines  on  certain  named  streets, 
such  a  grant  is  perpetual  if  the  public  body  has  authority 

>  McArthur  v.  Cheboygan,  156  Mich.  152,  120  N.  W.  575;  Boesen  v.  Potter 
County,  173  S.  W.  (Tex.)  462;  Gustavino  v.  U.  S.,  50  Ct.  CI.  115. 
=  Argus  Co.  V.  Mayor,  55  N.  Y.  495;  Matter  of  PhiUips,  60  N.  Y.  16. 

316 


CHAP.  XXXIII  ]  TIME   IN   CONTRACT  [  §  206 

to  make  a  perpetual  grant.'  A  contract  which  on  its  face 
purports  to  endure  forever  and  to  confer  a  perpetual 
franchise,  will  not  be  construed  as  a  grant  for  a  definite 
period,  namely,  limited  to  the  life  of  the  company  holding 
the  grant,  since  it  is  ultra  vires  and  void.-  While  it  is  the 
policy  of  the  law  to  declare  contracts  of  this  character  un- 
enforceable if  for  an  indefinite  time  or  an  unreasonable  pe- 
riod, upon  the  theory  that  a  municipality  exercising  its 
power  to  contract  may  not  for  an  unreasonable  time  fasten 
upon  its  residents  rates  and  obligations  impossible  of 
change,^  yet  where  these  contracts  are  not  malum  in  se, 
there  is  a  strong  tendency  to  sustain  the  grant  as  valid  to  the 
extent  at  least  that  it  does  not  transcend  a  reasonable  or  law- 
ful period.  Since  it  is  only  the  excess  which  offends  the  policy 
of  the  law,  grants  will  be  declared  invahd  only  as  to  the  time 
unauthorized.*  Any  rights  of  duration  or  occupation  must 
appear  in  plain  terms  and  not  equivocally,  as  any  ambi- 
guity in  the  terms  of  a  grant  will  be  resolved  in  favor  of 
the  public  body.  Whatever  is  not  unequivocally  granted 
is  withheld  and  nothing  will  pass  to  a  grantee  by  mere 
implication.^  Where  parties  express  no  period  of  duration 
and  no  definite  time  can  be  implied  from  the  nature  of  the 
contract  or  the  circumstances  surrounding  its  making,  it 

1  Covington  v.  So.  Covington  St.  Ry.  Co.,  246  U.  S.  413,  62  L.  Ed.  802; 
Northern  Ohio  Trac.  Co.  v.  Ohio,  245  U.  S.  574,  62  L.  Ed.  481;  Ownesboro 
V.  Owensboro  W.  Wks.  Co.,  243  U.  S.  166,  61  L.  Ed.  650;  Ownesboro  v.  Cum- 
berland T.  &  T.  Co.,  230  U.  S.  58,  57  L.  Ed.  1389. 

2  Westminster  v.  Westminster  W.  Co.,  98  Md.  551,  56  Atl.  990. 

3  Home  Tel.  Co.  v.  Los  Angeles,  211  U.  S.  265,  53  L.  Ed.  176,  aff'g  155  Fed. 
554;  Mobile  Elec.  Co.  v.  Mobile,  201  Ala.  607,  79  So.  39  L.  R.  A.  1918  F. 
667. 

^  Mobile  Elec.  Co.  v.  Mobile,  supra;  Columbus  Water  Wks.  v.  Columbus, 
48  Kan.  99,  28  Pac.  1097;  Oregon  S.  Nav.  Co.  v.  Winsor,  20  Wall.  (U.  S.)  64, 
22  L.  Ed.  315. 

5  Knoxville  W.  Co.  v.  Knoxville,  200  U.  S.  22,  50  L.  Ed.  353;  Blair  v.  Chicago, 
201  U.  S.  400,  50  L.  Ed.  801;  Mitchell  v.  Dakota  Tel.  Co.,  246  U.  S.  396,  62 
L.  Ed.  793. 

317 


§  206  ]         CONTRACT :   CONSTRUCTION,   OPERATION     [  PART  III 

is  unreasonable  to  impute  an  intention  to  make  its  dura- 
tion perpetual.    The  only  reasonable  intention  to  impute  is 
that  the  contract  may  be  terminated  by  either  on  his 
gi\'ing  reasonable  notice  of  his  intention  to  the  other.^ 
1  Childs  t;.  Columbia,  87  S.  C.  566,  70  S.  E.  296. 


318 


CHAPTER  XXXIV 

COMPENSATION 

§  207.  Construction — Compensation — Rules  Controlling. 

Where  the  compensation  specified  in  a  contract  is  a 
percentage  of  the  contract  price,  or  of  the  total  cost  of 
construction,  the  recovery  is  limited  to  the  amount 
specifically  named  in  the  contract  as  the  smn  contemplated 
by  the  parties,  and  it  will  not  be  extended  so  as  to  give  a 
percentage  of  a  sum  paid  for  superior  efficiency  of  an 
article  sold  or  to  cover  damages  paid  by  the  public  body 
for  its  breach  of  the  contract  beyond  the  contract  price.  ^ 
The  contract  price  will  generally  control  so  far  as  it  can 
be  made  applicable.  ^  Where  no  price  is  mentioned, 
the  law  implies  a  price  which  is  reasonable.^ 

1  Chicago  V.  Hunt,  227  111.  130,  81  N.  E.  243;  Boiler  v.  New  York,  117  N.  Y. 
App.  Div.  458. 

2  Quigley  v.  Summer  County,  24  Kan.  293;  Elgin  v.  Joslyn,  136  111.  525,  26 
N.  E.  1090. 

'  Murtagh  v.  Dist.  of  Columbia,  10  D.  C.  455;  Elgin  v.  Joslyn,  supra;  Eige- 
mann  v.  Poeey  County,  82  Ind.  413. 


319 


CHAPTER  XXXV 

ASSIGNMENT   OF   CONTRACT 

§  208.  Operation — Assignment  of  Contract. 

The  general  rule  is  that  an  executory  contract  not 
necessarily  personal  in  its  character,  which  can,  consistent 
with  the  rights  and  interests  of  the  adverse  party,  be 
sufficiently  executed  by  the  assignee,  is  assignable  in  the 
absence  of  other  agreement  in  the  contract.^  If  the 
service  to  be  rendered  or  the  condition  to  be  performed 
is  not  necessarily  personal,  involves  no  relation  of  con- 
fidence or  the  exercise  of  personal  skill  or  science,  or  such 
as  considering  the  contract  obligation  can  only  be  per- 
formed by  the  original  contractor,  its  assignment  will  not 
operate  as  a  rescission  of  or  constitute  a  cause  for  termi- 
nating the  contract.  2  The  assignment  may  include  all 
contingent  and  incidental  benefits  or  results  of  an  exec- 
utory contract,  as  well  as  the  earnings  under  it  and  thus 
entitle  the  assignee  to  the  damages  flowing  from  its  viola- 
tion. This  right  of  action  for  damages  for  the  breach 
would  survive  to  the  personal  representative  of  the  injured 
party,  and  such  survival  is  one  test  of  assignability.^ 
jMoneys  due  and  to  grow  due  may  be  assigned  even  before 
the  doing  of  the  work  or  the  performance  of  the  conditions 
upon  which  the  payments  depend.  These  expectancies, 
as  well  as  existing  rights  of  action,  may  be  assigned  and 

1  Devlin  v.  Mayor,  63  N.  Y.  8;  IMunsell  v.  Lewis,  2  Denio,  224;  St.  Louis  v. 
Clemens,  43  Mo.  395;  Philadelphia  v.  Lockhardt,  73  Pa.  St.  211;  Chapin  v. 
Pike,  184  Mass.  184,  08  N.  E.  42;  Ernst  v.  Kunkle,  5  Ohio  St.  520. 

2  Devlin  v.  Mayor,  supra. 
'  Devlin  v.  Mayor,  supra. 

320 


CHAP.  XXXV  ]  ASSIGNMENT   OF   CONTRACT  [  §  209 

the  rights  of  the  assignees  protected  and  enforced.^  If 
the  contract  is  personal,  and  performance  by  the  party  is 
of  its  essence,  then  it  cannot  devolve  upon  his  representa- 
tives and  so  cannot  be  assigned,  at  least  without  consent.^ 
Therefore  the  general  rule  is  that  public  contracts  can 
be  assigned  without  violating  public  policy  so  long  as  the 
public  body  retains  the  personal  obligation  of  the  original 
contractor  and  his  sureties  for  its  faithful  performance. 
In  the  absence  of  contract  or  statutory  provision  prohib- 
iting it,  such  an  assignment  is  valid.^ 

§  209.  Operation — Assignment  of  Contract — Statute  and 
Contract  Prohibition. 

In  most  cases  where  public  contracts  are  now  let  by 
the  Nation,  State  or  municipality,  provision  is  inserted 
therein  under  statutory  sanction  forbidding  their  assign- 
ment.^ 

In  the  case  of  government  contracts  it  is  provided  that 
if  the  contract  is  assigned  the  government  is  discharged 
from  all  liability  thereunder  and  the  contract  becomes 
invalidated.^ 

Some  provisions  of  contract  require  that  the  consent  of 
the  public  body  shall  be  obtained  in  writing  to  the  assign- 
ment and  that  in  the  absence  of  such  consent  no  right 

1  Field  V.  Mayor,  2  Seld.  (N.  Y.)  179;  Hall  v.  Buffalo,  2  Abb.  N.  Y.  Ct.  oif 
App.  Dec.  301;  Devlin  v.  Mayor,  supra. 

2  Devlin  v.  Mayor,  supra;  White's  Ex'rs.  v.  Commonwealth,  39  Pa.  St.  167; 
Pike  V.  Waltham,  168  Mass.  581,  47  N.  E.  437;  Delaware  County  v.  Diebold 
Safe  Co.,  133  U.  S.  473,  488,  33  L.  Ed.  674. 

3  Devlin  v.  Mayor,  supra;  Harris  v.  Baltimore,  73  Md.  22;  Fortunato  v. 
Patten,  147  N.  Y.  277,  41  N.  E.  572;  Murphy  v.  Plattsmouth,  78  Neb.  163, 
110  N.  W.  749. 

*  See  various  statutes  and  charters. 

5  Burck  V.  Taylor,  152  U.  S.  634,  38  L.  Ed.  578;  Hobbs  v.  McLean,  117  U.  S. 
567,  29  L.  Ed.  940;  Goodman  v.  Niblack,  102  U.  S.  556,  26  L.  Ed.  229;  Francis 
V.  U.  S.,  11  Ct.  CI.  638,  aff'd  96  U.  S.  354,  24  L.  Ed.  663;  Dulaney  v.  Scudder, 
94  Fed.  6;  R.  S.  of  U.  S.,  §.  3737,  Comp.  Stat.,  §  6890. 

321 


§  209  ]         CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

under  the  contract  nor  to  any  moneys  to  grow  due  by  its 
terms  may  be  asserted  against  the  public  body.  These 
pio\isions  do  not  render  assignments  void  which  are 
made  without  obtaining  the  consent  of  the  pubhc  body.^ 
They  are  inserted  solely  for  the  benefit  of  the  public  body 
and  will  operate  to  prevent  any  claim  being  asserted 
against  it  in  the  absence  of  consent. ^  While  it  is  a  shield 
to  protect  the  public  body,  it  cannot  be  used  as  a  weapon 
between  several  assignees  to  defeat  the  rights  of  a  senior 
assignee  who  fails  to  secure  the  necessary  consent.^  Such 
a  provision  of  the  contract  forbidding  assignment  without 
the  consent  of  the  pubhc  body  may  be  waived."*  It  has 
the  right  to  refuse  to  recognize  an  assignment  made 
without  its  consent  or  to  refuse  to  have  any  dealings  with 
the  assignee  under  it.  Where  it  deals  with  and  recognizes 
him,  makes  payments  to  him  and  accepts  the  work,  the 
failure  to  consent  in  writing  to  the  assignment  becomes 
immaterial  and  the  assignee  acquires  equitable  rights 
which  entitle  him  to  the  money  in  the  possession  of  the 
public  body.^  These  provisions  have  been  variously 
construed.  Some  authorities  favor  a  strict  construction 
of  the  terms.  Others  favor  a  liberal  construction  toward 
the  pubhc  body.  A  prohibition  against  assigning  the  con- 
tract  has   been   considered   to  prevent   an  assignment   of 

1  Fortunate  v.  Patten,  147  N.  Y.  277,  41  N.  E.  572. 

2  Fortunate  v.  Patten,  s?i/>ra;  Welles  v.  Portuguese  Am.  Bk.,  211  Fed.  561; 
Dulaney  v.  Scudder,  94  Fed.  6,  10;  Federal  Mfg.  &  P.  Co.  v.  U.  S.,  41  Ct.  CI. 
318;  Omaha  v.  Standard  Oil  Co.,  55  Neb.  337,  75  N.  W.  859;  Burnett  v.  Jersey 
City,  31  N.  J.  Eq.  341. 

*  Fortunate  v.  Patten,  supra;  Dulaney  v.  Scudder,  94  Fed.  6. 

*  Brewster  v.  Homellsville,  35  N.  Y.  App.  Div.  161;  Staples  v.  Somerville, 
176  Mass.  237,  57  N.  E.  380. 

5  Staples  V.  Somerville,  supra;  Taber  v.  Ferguson,  109  Ind.  227,  9  N.  E.  723; 
McCubbin  v.  Atchison,  12  Kan.  166;  Bk.  of  Harlem  v.  Bayonne,  48  N.  J.  Eq. 
246,  21  Atl.  478;  Dickson  v.  St.  Paul,  97  Minn.  258,  106  N.  W.  1053;  Norton  v. 
Rcslyn,  10  Wash.  44,  38  Pac.  878;  Ocorr  &  Rugg  v.  I.itt'e  Fa'ls,  77  N.  Y.  App. 
Div.  592,  608,  178  N.  Y.  622,  70  N.  E.  1104. 

322 


CHAP.  XXXV  ]         ASSIGNMENT  OF   CONTRACT  [  §  209 

a  single  installment.^  But  it  would  seem  that  one  could 
assign  the  benefits  of  performance,  so  long  as  he  retained 
the  burdens  and  the  obligation  of  performance,  without 
violating  a  provision  which  did  not  at  the  same  time  forbid 
an  assignment  of  the  moneys  to  grow  due.^  Such  an 
assignment  is  not  an  assignment  of  the  contract.^  An 
assignment  of  part  of  the  contract  or  an  equitable  assign- 
ment does  not  fall  within  the  prohibition  of  such  a  provi- 
sion." Neither  does  a  judicial  sale  of  the  contract,^  nor 
a  partnership  change,^  nor  an  assignment  in  bankruptcy  ^ 
nor  a  voluntary  assignment.^  Contracting  with  a  third 
party  to  furnish  material  for  the  work  does  not  violate 
the  federal  statute.^  The  defens.e  of  the  invalidity  of  such 
an  assigrmaent  to  be  availed  of  must  be  pleaded.  ^° 

1  Omaha  v.  Standard  Oil  Co.,  supra. 

2  Lowry  v.  Duluth,  94  Minn.  95,  101  N.  W.  1059;  Dickson  t;.  St.  Paul,  supra. 
Fortunate  v.  Patten,  supra;  Snyder  v.  New  York,  74  N.  Y.  App.  Div  421; 
Episcopo  V.  Mayor,  35  Misc.  623. 

» Brace  v.  Gloversville,  167  N.  Y.  452,  60  N.  E.  779;  Snyder  v.  New  York, 
supra. 

*  Ocorr  &  Rugg  v.  Little  Falls,  supra;  Hinkle  Iron  Co.  v.  Kohn,  229  N.  Y. 
179,  128  N.  E.  113. 

6  St.  Paul  &c  R.  Co.  t'.  U.  S.,  112  U.  S.  733,  28  L.  Ed.  861,  aff'g  18  Ct.  CI. 
405.  See  Prairie  State  Bank  v.  U.  S.,  164  U.  S.  227,  41  L.  Ed.  412,  aff'g  27  Ct. 
CI.  185. 

6  Hobbs  V.  McLean,  117  U.  S.  567,  29  L.  Ed.  940. 

^  Erwin  v.  U.  S.  97  U.  S.,  392,  24  L.  Ed.  1065  aff'g  13  Ct.  CI.  49 

8  Goodman  v.  Niblack,  102  U.  S.  556,  26  L.  Ed.  229. 

9  U.  S.  V.  Farley,  91  Fed.  474. 

'0  Burke  i^.  Mayor,  7  N.  Y.  App.  Div.  128. 


323 


CHAPTER  XXXVI 

EXTRA  WORK 

§  210.  What  It  Is. 

The  term  extra  work  usually  includes  all  work  required 
by  a  change  of  plan.  It  is  difficult  to  conceive  of  extra 
work  without  a  change  of  plan,  and  the  fair  construction 
of  contracts  which  have  inserted  a  provision  for  extra 
work  is  to  include  all  work  within  such  term  which  is 
necessitated  by  such  changes,  whether  termed  incidental 
or  fundamental.^  Extra  work  is  work  arising  outside  and 
entirely  independent  of  the  contract,  something  not  re- 
quired in  its  performance.  Additional  work  on  the  other 
hand,  is  something  necessarily  required  in  the  performance 
of  the  contract  and  without  which  it  could  not  be  carried 
out.  The  necessity  for  additional  work,  usually  arises 
from  conditions  which  cannot  be  anticipated  and  which 
are  not  open  to  observation  and  cannot  be  discovered  until 
the  specified  work  under  the  contract  is  actually  under- 
taken.^ Extra  work  has  again  been  defined  to  consist  of 
labor  or  materials  not  called  for  by  the  original  contract.^ 
It  denotes  something  done  or  furnished  in  addition  to,  or 
in  excess  of,  the  requirements  of  the  contract,  something 
not  required  in  its  performance.^    These  questions  relating 

1  Peole  ex.  rel.  McCabe  v.  Snedeker,  106  N.  Y.  App.  Div.  89,  182  N.  Y. 
558,  75  N.  E.  1133. 

2  Shields  v.  New  York,  84  N.  Y.  App.  Div.  502. 

'Casgrain  v.  Milwaukee,  81  Wis.  113,  51  N.  W.  88;  Malloy  v.  BriarclifF 
Manor,  145  N.  Y.  App.  Div.  483;  U.  S.  Wood  Preserving  Co.  i'.  New  York, 
138  Id.  841.     See  Coryell  v.  Dubois  Borough,  226  Pa.  St.  103,  75  Atl.  25. 

*  Fullerton  v.  Des  Moines,  147  Iowa,  254,  126  N.  W.  159. 

324 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  211 

to  extra  work  depend  for  their  decision  upon  the  terms  of 
particular  contracts.  Where  the  construction  of  an  entire 
work  is  provided  for  at  a  fixed  compensation,  the  hazards 
of  it  are  assumed  by  the  contractor,  and  if  it  turns  out  that 
he  has  made  a  mistake  in  his  estimate  or  that  the  work  is 
more  expensive  or  difficult  than  he  anticipated,  he  cannot 
ask  for  compensation  for  such  unforeseen  difficulties  under 
the  guise  of  extra  work. 

§211.  Whether  Work  Is,  Depends  upon  True  Construc- 
tion of  Contract — Entirety. 
Whether  work  is  extra  work  depends  upon  a  proper 
construction  of  each  contract,  its  objects  and  purposes,  the 
intention  of  the  parties  and  what  was  within  the  contem- 
plation of  the  parties  as  the  work  to  be  done.^  Even 
though  a  contractor  is  to  do  a  particular  work  for  a  sum 
total,  payable  in  installments,  so  that  the  contract  is  an 
entire  contract,  this  fact  is  not  always  controlling.  The 
manner  and  means  of  doing  the  work  may  determine  the 
question  of  extra  work.  If  the  contract  is  absolute  to 
deliver  a  completed  structure,  that  result  must  be  ac- 
complished even  though  parts  of  the  work  may  have  to 
be  done  several  times  and  no  claim  for  extra  work  may 
arise.  But  if  the  contract  is  to  build  a  completed  struc" 
ture  with  materials  furnished  by  the  public  body  and  the 
work  proves  insufficient,  whether  it  be  a  tunnel  which 
caves  in  because  the  timbering  furnished  by  the  public 
body  is  insufiicient  or  the  sand  or  cement  or  brick  so 
furnished  and  used  in  a  tunnel  or  a  wall  of  a  structure 
proves  inferior  and  therefore  the  work  becomes  insecure, 
or  because  work  done  by  some  other  contractor  proves 

1  Uvalde  Asphalt  Pav.  Co.  v.  New  York,  154  App.  Div.  112,  211  N.  Y.  560, 
105  N.  E.  1100;  U.  S.  v.  Gibbons,  109  U.  S.  200,  27  L.  Ed.  906,  aff'g  15  Ct. 
CI.  174. 

325 


§211]       contract:  construction,  operation    [  part  in 

unstable, — in  these  and  like  cases  the  work  to  be  done 
over  again  is  clearly  not  wathin  the  contract,  not  within 
the  contemplation  of  the  parties,  and  its  character  as  extra 
work  cannot  be  governed  by  any  principle  of  entirety  of 
contract.  The  contractor  is  entitled  to  be  paid  where  the 
extra  work  is  caused  by  the  fault  of  the  other  party.  ^ 
So,  where  there  is  error  in  fixing  grades  and  the  pubhc 
body  has  full  knowledge  of  it  and  compels  a  contractor 
to  proceed  against  his  objection  and  extra  work  is  thus 
occasioned,  the  pubhc  body  is  liable.^ 

§  212.  May  not  be  Claimed  where  Work  is  Included  in 
Contract  or  is  Voluntarily  Performed. 

Work  included  in  a  contract,  work  or  materials  vol- 
untarily performed  or  furnished  ^^ithout  request  and 
without  knowledge  of  the  public  body  afford  no  basis  for 
a  claim  of  extra  work.'  If  on  a  reading  of  the  entire  con- 
tract it  would  appear  that  the  intention  of  the  parties  was 
to  include  the  work  in  dispute  within  the  contract,  it 
cannot  be  claimed  to  be  extra  work.^     A  practical  con- 

1  Becker  v.  New  York,  53  N.  Y.  App.  Div.  301,  170  N.  Y.  219,  63  N.  E. 
298;  Becker  v.  New  York,  77  N.  Y.  App.  Div.  635,  mod.  O.  G.  176  N.  Y. 
441,  68  N.  E.  855. 

2  Idem. 

'Duncan  v.  Miami  County,  19  Ind.  154;  West  Chicago  P.  C.  v.  Kincade, 
64  lU.  App.  113;  Davies  v.  East  Saginaw,  66  Mich.  37,  32  N.  W.  919;  O'Brien 
V.  ISiayor,  65  Hun,  112,  139  N.  Y.  543;  Gartner  v.  Detroit,  131  Mich.  21,  90  N. 
W.  690;  Erickson  v.  U.  S.,  107  Fed.  204;  Shipraan  v.  Dist.  of  Columbia,  18  Ct. 
CI.  291,  119  U.  S.  148,  30  L.  Ed.  337;  McFerran  v.  U.  S.,  39  Ct.  CI.  441; 
Braden  v.  U.  S.,  16  Ct.  CI.  389. 

<Langford  v.  Manchester,  196  Mass.  211,  81  N.  E.  884;  Palladino  v.  New 
York,  56  Hun,  565,  125  N.  Y.  733,  26  N.  E.  757;  Crocker  v.  Buffalo,  90  N.  Y. 
351;  Rens  v.  Grand  Rapids,  73  Mich.  237,  41  N.  W.  263;  Bums  v.  New  York, 
69  N.  Y.  App.  Div.  214;  Costa  v.  Cranford,  75  N.  J.  L.  542,  68  Atl.  160; 
Morgan  i'.  Baltimore  58  Md.  509;  Merrill  Ruckgaber  Co.  v.  U.  S.,  241  U.  S. 
387,  60 L.  Ed.  1058,  aff'g  49  Ct.  CI.  5.53;  SeUs  v.  Chicago,  201  Fed.  874;  Conners 
V.  U.  S.,  141  Fed.  16;  Beattie  v.  McMullen,  82  Conn.  484,  74  Atl.  767;  Geary  v. 
New  Haven,  76  Conn.  84,  55  Atl.  584;  Rathbun  v.  State,  15  Idaho,  273,  97  Pac. 
335. 

326 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  213 

struction  by  the  parties  as  to  whether  work  is  extra  work 
or  is  included  in  the  contract  will  be  given  consideration 
in  deciding  the  question.^ 

§  213.  Duty  to  Make  Claim  for  Payment  or  Protest. 

It  is  highly  important,  especially  in  public  contracts, 
that  claims  growing  out  of  changes  in  the  contract  should 
be  promptly  asserted,  so  that  the  public  authorities  will 
know  what  a  public  work  is  costing  as  it  progresses  and 
not  be  subjected  to  large  increases  in  cost  based  upon 
stale  claims  presented  years  after  the  event.^  Where  a 
contractor  accepts  progress  payments  running  over  a  long 
period  of  time,  without  a  suggestion  by  way  of  presenta- 
tion of  a  bill,  reservation  of  a  claim  or  protest  of  any  sort, 
indicating  that  there  has  been  any  loss  or  disadvantage  or 
that  the  contractor  had  any  claim  growing  out  of  compli- 
ances with  directions  of  the  engineer  upon  the  work,  the 
pubhc  body  cannot  be  held  liable.  The  reasonable  time  to 
make  the  claim  is  before  the  work  is  done.  If,  therefore,  a 
contractor  is  ordered  to  make  changes  and  makes  them 
without  protest  and  later  accepts  payments  and  gives  a 
receipt  in  full  without  protest  or  reservation,  he  ratifies 
the  changes  and  cannot  recover  for  same  as  extra  work.^ 
When,  however,  extra  work  is  done  by  a  contractor  with 
knowledge  of  the  public  body  to  whom  the  contractor 
makes  a  claim  that  he  expects  to  be  paid  therefor,  an 
implied  promise  will  arise  to  pay  for  such  extra  work.* 
Unless   he   objects,    the   contractor's   assent   is   presumed 

1  Dist.  of  Columbia  v.  GaUaher,  124  U.  S.  505,  31  L.  Ed.  526,  aff'g  19  Ct.  CI. 
564;  Fulton  County  v.  Gibson,  158  Ind.  471,  63  N.  E.  982. 

2  Ryan  v.  New  York,  179  N.  Y.  App.  Div.  181;  DriscoU  v.  U.  S.,  34  Ct.  CI. 
608.    See  Bumham  v.  Milwaukee,  100  Wis.  55,  75  N.  W  1014. 

3  Peck  V.  U.  S.,  14  Ct.  CI.  84;  Martin  v.  U.  S.,  5  Ct.  CI.  215. 

4  Gibbons  v.  U.  S.,  15  Ct.  CI.  174,  aff'd  109  U.  S.  200, 27  L.  Ed.  906;  Cooper 
V.  U.  S.,  8  Ct.  CI.  199. 

327 


§213]       contract:  construction,  operation    [  part  hi 

where  the  change  ordered  is  of  a  kind  that  would  not 
reasonably  be  assumed  to  increase  the  cost.  But  where  it 
will  necessarily  increase  the  cost,  his  assent  is  not  pre- 
sumed, and  if  he  does  not  expressly  assent  he  may  recover 
the  amount  of  such  increase.^  But  in  mimicipal  contracts, 
if  the  work  is  clearly  outside  the  contract  and  the  competi- 
tive  bidding   statutes   control,    this    rule   cannot   apply.^ 

§  214.  Authority  of  Engineer  or  Architect  to  Order. 

The  engineer  or  architect  appointed  by  the  public  body 
to  super\dse  the  work  is  its  special  agent  merely  and  has 
no  power  to  bind  the  public  body  beyond  the  express 
authority  conferred  upon  him  by  the  contract.  The  acts 
of  an  architect  or  engineer  in  ordering  extra  work  are  their 
individual  acts  and  cannot  be  regarded  as  the  acts  of 
the  public  body,  except  in  so  far  as  they  are  authorized  by 
resolution  or  by  contract.^  An  oral  promise  by  the  archi- 
tect, even  if  founded  upon  a  sufficient  consideration,  to 
pay  for  the  work  sued  for  as  extra  w^ork,  if  made  without 
authority,  is  not  binding  upon  the  public  body.^  Unless 
authority  is  shown  in  an  engineer  or  architect,  none  will 
be  implied.^  If  extra  work  is  performed  with  the  knowl- 
edge or  consent  or  at  the  direction  of  the  public  body,  it 
becomes  liable  therefor.^ 

1  Ford  V.  U.  S.,  17  Ct.  CI.  60;  Dale  v.  U.  S.,  14  Ct.  CI.  514;  Merch.  Exch. 
Co.  V.  U.  S.,  15  Ct.  CI.  270. 

2  Borough  Cons.  Co.  t-.  New  York,  200  N.  Y.  149,  93  N.  E.  480. 

» Long  V.  Pierce  Cf)unty,  22  Wash.  330,  61  Pac.  142;  Allen  v.  Melrose,  184 
Mass.  1,  67  N.  E.  lOGO;  People  ex  rel.  McCabe  v.  Snedeker,  106  N.  Y.  App.  Div. 
89,  182  N.  Y.  558,  75  N.  E.  1133;  Becker  v.  New  York,  176  N.  Y.  441,  68  N.  E. 
855;  Beattie  v.  McMullen,  82  Conn.  484,  74  Atl.  767;  Sexton  v.  Cook  County, 
114  111.  174,  28  N.  E.  608;  Eigemann  v.  Posey  County,  82  Ind.  413;  Wood  v. 
Ft.  Wavne,  119  U.  S.  312,  30  L.  Ed.  416;  Dale  v.  U.  S.,  14  Ct.  CI.  514;  Merchants' 
Exch.  Co.  V.  U.  S.,  15  Ct.  CI.  270;  Dialogue  v.  U.  S.,  22  Ct.  CI.  196;  Collins  v. 
U.  S.,  34  Ct.  CI.  294. 

*  Stuart  V.  Cambridge,  125  Mass.  102. 

5  Dillon  V.  Syracuse,  9  N.  Y.  Supp.  98. 

« Gibson  County  v.  Motherwell  I.  &  S.  Co.,  123  Ind.  364,  24  N.  E.  115; 

328 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  216 

§215.  Order  or  Request  for  Extra  Work— Must  Come 
from  One  with  Authority. 
A  departure  from  the  terms  of  a  contract  can  find  no 
legal  justification  unless  it  is  done  at  the  direction  or  by 
the  request  of  one  clothed  with  authority  to  change  its 
provisions.  Therefore,  any  change  or  modification  of  a 
contract  by  which  extra  work  is  entailed  must  be  directed 
or  requested  by  those  empowered  to  change  or  add  to  the 
terms  of  a  contract  or  at  least  must  be  done  by  the 
acquiescence  of  the  public  body.^  The  authority  of  the 
officer  will  not  be  implied. 

§  216.  Provision  for  Order  in  Writing. 

Where  the  contract  provides  that  changes  increasing  the 
cost  of  work,  or  increasing  or  diminishing  the  cost  must  be 
agreed  on  in  writing  with  the  contractor  and  the  architect 
or  engineer,  and  there  is  a  failure  to  comply  with  these 
provisions,   no  recovery  may  be  had.^     In   Uke  manner 

O'Deat;.  Winona,  41  Minn.  424,  43  N.  W.  97;  Steffen  v.  St.  Louis,  135  Mo  44 
36  S.  W.  31;  Messenger  v.  Buffalo,  21  N.  Y.  196. 

1  Bonesteel  v.  Mayor,  22  N.  Y.  162;  People  exrel  McCabe  v.  Snedeker  103 
N.  Y.  App.  Div.  89,  182  N.  Y.  558,  75  N.  E.  1133;  Becker  v.  New  York,  176 
N.  Y.  441,  68  N.  E.  855;  Wormstead  v.  Lynn,  184  Mass.  425,  68  N.  E.  841; 
Boston  Elec.  Co.  v.  Cambridge,  163  Mass.  64,  39  N.  E.  787;  Addis  v.  Pitts- 
burgh, 85  Pa.  St.  379;  Leathers  v.  Springfield,  65  Mo.  504;  West  Chicago  Pk. 
Comm.  V.  Kincade,  64  111.  App.  113;  Griffith  Co.  v.  Los  Angeles,  54  Pac 
(Cal.)  383;  Ferris  v.  U.  S.,  28  Ct.  CI.  332;  Merchants'  Exch.  Co.  v.  U.  S.,  15  Ct 
CI.  270;  Murphy  i>.  U.  S.,  13  Ct.  CI.  372;  Plumley  v.V.S.,  226  U.  S.  545,  57  L.  Ed. 
342;  Phoenix  B.  Co.  v.  U.  S.,  211  U.  S.  188,  53  L.  Ed.  141,  aff'g  38  Ct.  CI.  492; 
Bd.  of  Imp.  Comm'rs  v.  Galbraith,  123  Ark.  619,  185  S.  W.  474. 

2  Duncan  v.  Miami  County,  19  Ind.  154;  Russell  v.  Sa  Da  Bandeira,  13  C.  B. 
N.  s.  149,  32  L.  J.  C.  P.  N.  s.  68,  9  Jur.  n.  s.  718,  7  L.  T.  n.  s.  804;  Heard  v. 
Dooly  County,  101  Ga.  619,  28  S.  E.  986;  Archer  v.  Franklin  County,  78  Wash. 
20,  138  Pac.  299;  Bentley  v.  Davidson,  74  Wis.  420,  43  N.  W.  139;  Johnson  v. 
Albany,  86  N.  Y.  App.  Div.  567;  McLaughlin  v.  Bayonne,  75  N.  J.  L.  106, 
66  Atl.  1070;  Condon  v.  Jersey  City,  43  N.  J.  L.  452;  McManus  v.  PhOadelphia, 
201  Pa.  St.  619,  51  Atl.  322;  Duluth  v.  McDonneU,  61  Minn.  288,  63  N.  W. 
727;  King  v.  Duluth,  78  Minn.  155,  80  N.  W.  874,  81  Minn.  182,  83  N.  W. 
526;  Watterson  v.  Nashville,  106  Tenn.  410,  61  S.  W.  782;  Monarch  v.  Mc- 
Donogh  Sch.  Fund,  49  La.  Ann.  991,  22  So.  259;  Capital  City  &c.  Co.  v.  Des 
Momes,  136  Iowa,  243,  113  N.  W.  835. 

329 


§216]       contract:  construction,  operation    [  part  hi 

where,  as  in  some  contracts,  there  must  be  in  addition  the 
approval  by  a  particular  officer,  without  such  the  contractor 
cannot  recover,  although  it  may  be  a  hard  case,  since  the 
extra  work  is  not  ordered  in  the  manner  required  by  the  con- 
tract.^ And  a  contractor  may  not  rely  upon  the  oral  order 
of  the  engineer.'-  These  provisions  of  the  contract  that  the 
extra  work  shall  be  ordered  in  writing  and  that  unless  so 
ordered  the  public  body  shall  not  be  hable  therefor,  consti- 
tute a  condition  precedent  to  any  payment  for  extra 
work.^ 

§  217.  The  Same — Engineer  or  Architect  may  not  Waive. 

The  provision  of  a  public  contract  that  a  contractor  will 
not  make  any  claim  for  extra  work  unless  it  is  performed 
in  pursuance  of  written  contracts  or  orders  cannot  be 
waived  by  the  engineer  or  architect  in  charge  of  the 
work.-* 

§  218.  The  Same — Waiver— Estoppel. 

When  the  public  body  itself  having  the  power  to  make 
the  contract  authorizes  and  directs  the  doing  of  extra 
work,  it  will  be  estopped  from  contending  that  the  con- 
tractor may  not  recover  therefor,  because  the  contract  re- 
quires that  an  agreement  or  an  order  in  writing  should  be 

1  Plumley  v.  U.  S.,  226  U.  S.  545,  57  L.  Ed.  342;  Hawkins  v.  U.  S.  96  U.  S. 
689,  24  L.  Ed.  607  aff'g  12  Ct.  CI.  181;  MiUen  v.  Boston,  217  Mass.  471,  105 
N.  E.  453. 

2  Bd.  of  Commrs.  v.  Galbraith,  123  Ark.  619,  185  S.  W.  474;  Huntington  v. 
Force,  152  Ind.  368,  53  N.  E.  443;  Rens  v.  Grand  Rapids,  73  Mich.  237,  41  N. 
W.  263;  Cashman  v.  Boston,  190  Mass.  215,  76  N.  E.  671;  Stuart  v.  Cambridge, 
125  Mass.  102;  Abells  v.  Syracuse,  7  N.  Y.  App.  Div.  501;  Cincinatti  v.  Cam- 
eron, 33  Ohio  St.  336;McManus  r.  Philadelphia,  201  Pa.  St.  619,51  Atl.322; 
Carson  v.  Dawson,  129  Minn.  453,  152  N.  W.  842. 

»  O'Brien  v.  New  York,  139  N.  Y.  543,  35  N.  E.  323;  Millen  v.  Boston,  217 
Mass.  471,  105  N.  E.  453;  Plumley  v.  U.  S.,226  U.  S.  545,  57  L.  Ed.  342. 

*  Malloy  V.  BriarcUff  Manor,  145  N.  Y.  Apo.  Div.  403,  491;  Van  Buskirk  v. 
Bd.  of  Educ.  Pa.ssaic  Tp.,  78  N.  J.  L.  650,  75  Atl.  909. 

330 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  219 

made  concerning  it.^    Such  waiver  may  be  shown  by  oral 
evidence.^ 

§  219.  Ratification  of  Act  of  Engineer  in  Failing  to  Issue 
Written  Order. 

A  public  body  may  ratify  the  act  of  its  engineer  or  other 
officer  who  fails  to  order  in  writing  extra  work  as  required 
by  the  terms  of  its  contract.  Having  full  knowledge  of  the 
situation,  if  the  public  body  recognizes  the  claim  as  valid 
by  paying  a  part  thereof  and  by  accepting  the  work  as  per- 
formed, this  will  amount  to  a  ratification  of  the  act  of  the 
engineer  in  orally  ordering  the  extra  work,  since  this  is 
equivalent  to  an  original  authority  in  writing.^  But 
declarations  of  one  or  more  or  even  all  of  the  council 
members  that  they  would  be  wilUng  to  consent  to  changes 
and  allow  extra  pay  for  increased  work,  will  not  bind.  The 
public  body  is  bound  by  the  council  acting  as  a  body  when 
duly  convened,  not  by  the  several  members  acting  as  indi- 
viduals."* But  while  ratification  may  under  some  circum- 
stances be  inferred  from  receipt  of  benefits  of  perform- 
ances, it  will  not  be  inferred  unless  by  some  express  act  of 
the  council  or  governing  body.  No  inference  that  it  in- 
tends to  accept  any  work  performed  without  its  authority 
or  consent  will  be  indulged  even  from  the  fact  that  the 
work  done  or  structure  erected  is  afterwards  used  by  the 

1  Dwyer  v.  New  York,  77  N.  Y.  App  Div.  224;  Hasbrouck  v.  Milwaukee,  21 
Wis.  217;  Elgin  v.  Joslyn,  36  III.  App.  301,aff'd  136  III.  525,  26  N.  E.  1090; 
Gibson  County  v.  Mothens'ell  I.  &  S.  Co.,  123  Ind.  364,  24  N.  E.  115;  Bartlett  v. 
Stanchfield,  148  Mass.  394,  19  N.  E.  549;  Douglass  v.  Morrisville,  89  Vt. 
393,  95  Atl.  810;  Abell  v.  Syracuse,  7  N.  Y.  App.  Div.  501;  Long  v.  Pierce 
County,  22  Wash.  330,  61  Pac.  142;  Van  Buskirk  v.  Bd.  of  Educ.  Passaic  Tp., 
78  N.  J.,L.650,  75  Atl.  909;  Braden  v.  U.  S.,  16  Ct.  CI.  389;  Riverside  Tp.  v. 
Stewart,  211  Fed.  873. 

-  Long  V.  Pierce  County,  supra. 

^  Abells  t'.  Syracuse,  7  N.  Y.  App.  Div.  501. 

*  Murphy  v.  Albina,  22  Oreg.  106,  29  Pac.  353.  See  Rowe  v.  Peabody,  207 
Mass.  226;  93  N.  E.  604. 

331 


§219]       contract:  construction,  operation    [  part  in 

public.^  An  officer  who  has  no  authority  to  contract  has  no 
authority  to  ratify.  The  acceptance  and  use  of  a  building 
into  which  has  been  put  unauthorized  extra  work,  will 
not  bind  the  public  body  to  pay  for  it,  even  though  it  is 
beneficial.  The  public  body  may  not  decline  to  use  the 
building  and  refuse  acceptance,  on  the  ground  that  it  con- 
tains such  work,  and  since  it  is  not  bound  to  take  out  the 
extra  or  unauthorized  work,  acceptance  and  use  of  the 
building  is  not  proof  of  ratification.-  Certificates  of  per- 
formance and  completion  of  a  contract  which  is  illegal  are 
not  conclusive  evidence  of  the  validity  of  the  very  contract 
which  provides  for  them  and  cannot  be  considered  as  rati- 
fying extra  work  improperly  ordered. ^ 

§  220.  Provision  that  Order  in  Writing  must  be  Obtained 
Therefor — When  not  Applicable. 

When  the  contract  provides  that  the  contractor  shall 
make  no  claim  for  extra  work  unless  the  same  is  agreed 
upon  in  writing,  such  a  provision  can  only  relate  to  work 
not  within  the  contract,  but  has  no  application  to  changes 
and  alterations  in  the  work  intended  to  be  covered  by  the 
agreement.  Where  these  changes  and  alterations  are  made 
by  competent  authority,  recovery  may  be  had  for  them 
without  a  written  order.  ^  So  where  there  is  a  change  in 
the  manner  of  doing  the  specified  work,  this  is  not  a  change 
or  modification  of  the  contract  and  a  written  order  is  not 
required. ^^    Where  conditions  at  the  site  prove  to  be  not  as 

'  Murj)hy  v.  Albina,  su])ra  and  cases  cited;  Zottman  v.  San  Francisco,  20 
Cal.  86,  81  Am.  Dec.  96. 

2  Boston  Elec.  L.  Co.  v.  Cambridge,  163  Mass.  64,  39  N.  E.  787. 

'  Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219. 

^Dwyer  v.  New  York,  77  N.  Y.  App.  Div.  224;  Wood  v.  Ft.  Wayne,  119 
U.  S.  312,  30  L.  Ed.  416;  Long  v.  Pierce  County,  22  Wash.  330,  61  Pac.  142; 
Carson  v.  Dawson,  129  Minn.  453,  152  N.  W.  842.  See  Beattie  v.  McMullen, 
80  Conn.  161,  67  Atl.  488;  Roemheld  v.  Chicago,  231  111.  467,  83  N.  E.  291; 
Clark  &  Sons  Co.  v.  Pittsburg,  217  Pa.  St.  46,  66  Atl.  154. 

5  U.  S.  V.  Barlow,  184  U.  S.  123,  46  L.  Ed.  463. 

332 


CHAP.  XXXVI  ]  EXTRA  WORK  [  §  222 

represented,  and  a  radical  change  of  plan  becomes  neces- 
sary thereby,  and  it  conclusively  appears  that  the  decision 
of  the  engineer  that  all  work  rendered  necessary  by  such 
change  was  included  in  the  contract  is  arbitrary  and  be- 
cause of  a  mistake  of  fact,  the  refusal  of  the  engineer  to 
issue  a  written  order  which  was  requested  will  not  bar  a 
recovery.^  Where  the  provision  for  written  order  relates 
to  extra  work  it  will  not  cover  additional  work^  and  where 
it  is  required  for  alterations  or  changes  it  is  not  essential 
for  extra  work.^ 

§  221.  Done  by  Order  of  Public  Body — Liability. 

Where  a  contractor  is  required  to  perform  extra  services 
not  embraced  within  the  contract  and  the  changes  are 
made  by  the  order  of  the  engineer  and  the  public  body, 
the  latter  having  ordered  and  required  a  change  is  not  in  a 
situation  to  defeat  a  contractor  who  obeys  its  orders  and 
requirements.  The  pubhc  body  will  not  be  permitted  to 
repudiate  its  own  acts  at  the  expense  of  the  contractor, 
who  does  what  is  exacted  of  him.^ 

§  222.  Caused  by  Acts  of  Public  Body  by  Ordering  Supe- 
rior Grade  of  Work  or  Material  than  Required — 
Making  Work  More  Expensive. 
When  a  public  body  requires  a  contractor  to  do  work 
superior  in  quahty  to  that  which  the  contract  specifies  or 
compels  the  use  of  materials  of  superior  grade  to  that  indi- 
cated in  the  contract,  and  the  work  or  materials  so  fur- 
nished are  not  provided  voluntarily,  but  under  order  of  the 

1  King  V.  Duluth,  78  Minn.  155,  80  N.  W.  874,  81  Minn.  182,  63  N,  W.  727. 

2  Shields  v.  New  York,  84  N.  Y.  App.  Div.  502. 
'  Beattie  v.  McMullen,  supra. 

*  Bd.  of  HamUton  County  v.  Newlin,  132  Ind.  27,  31  N.  E.  465.     See  cases 
ante,  §  214  note  3. 

333 


§  222  ]    CONTRACT :  CONSTRUCTION,  OPERATION  [  PART  TH 

engineer  and  against  the  protest  of  the  contractor,  the 
latter  is  entitled  to  recover  their  reasonable  value. ^  Some 
jurisdictions  deny  the  right  of  recovery  upon  the  basis  of 
an  implied  obligation  to  pay  for  the  excess  value,  and  place 
the  hability  to  respond  in  damages  for  breach  of  contract. ^ 
I 
§  223.  Where  Work  Specified  is  Made  More  Expensive  to 

do   Through  Act   of  Public  Body — Where  Less 

Expensive. 
If  a  public  body,  by  its  own  act,  causes  the  work  to  be 
done  by  a  contractor  to  be  more  expensive  than  it  other- 
wise would  have  been  according  to  the  terms  of  the 
original  contract,  it  is  liable  to  him  for  the  increased  cost  or 
extra  expense.^  Because,  however,  a  public  body  pre- 
scribes a  less  amount  of  work  to  be  done  will  not  authorize 
a  claim  that  the  work  specified  shall  be  paid  for  at  a  less 
rate  than  the  contract  provides.  The  public  body  has  a 
right  to  demand  the  very  work  specified,  but,  if  it  accepts 
anything  less  as  sufficient,  it  has  no  right  to  insist  upon  a 
rebate  for  that  reason."*  But  if  it  is  expressly  provided  in 
the  contract  that  where  changes  in  the  work  reduce  the 

1  Beattie  v.  McMuUen,  80  Conn.  160,  67  Atl.  488;  White  v.  New  Orleans, 
15  La.  Ann.  667;  Barlow  v.  U.  S.,  35  Ct.  CI.  514,  184  U.  S.  123,  46  L.  Ed.  463; 
Hawkins  v.  V.  S.  12  Ct.  CI.  181,  96  U.  S.  689,  24  L.  Ed.  607;  CaUahan  Cons. 
Co.  V.  U.  S.,  47  Ct.  CI.  229. 

2  See  cases  §  230  post. 

3  Horgan  v.  Mayor,  160  N.  Y.  516,  55  N.  E.  204;  Brady  v.  Mayor,  132  N.  Y. 
415,  30  N.  E.  757;  MulhoUand  v.  Mayor,  113  N.  Y.  631,  20  N.  E.  856;  Mes. 
senger  v.  Buffalo,  21  N.  Y.  196;  Lentilhon  v.  New  York,  102  N.  Y.  App.  Div. 
548,  185  N.  Y.  549  77  N.  E.  1190;  Dwyer  v.  Mayor,  77  N.  Y.  App.  Div.  224; 
McCann  v.  Albany,  11  Id.  378,  158  N.  Y.  634,  53  N.  E.  673;  Becker  v.  New 
York,  176  N.  Y.  441,  68  N.  E.  855;  Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E. 
804;  King  v.  Duluth,  78  Minn.  155,  80  N.  W.  874,  81  Minn.  182,  83  N.  W. 
526;  O'NeiU  v.  Milwaukee,  121  Wis.  32,  98  N.  W.  963;  Chicago  v.  Duffy,  218 
111.  242,  75  N.  E.  912;  Bd.  of  HamUton  County  v.  Newlin,  132  Ind.  27,  31 
N.  E.  465. 

*  Kingsley  v.  Brooklyn,  78  N.  Y.  200;  Finucane  Co.  v.  Bd.  of  Education, 
190  N.  Y.  76,  82  N.  E.  737;  Beinhauer  v.  Gleason,  15  N.  Y.  St.  R.  227,  119 
N.  Y.  658,  23  N.  E.  1150;  Brabazon  v.  Seymour,  42  Conn.  551. 

334 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  225 

cost  of  the  work,  the  contract  price  shall  be  reduced  pro- 
portionately, such  provision  will  be  enforced.^ 

Where  a  contract  is  modified  with  the  consent  of  the 
public  body  and  certain  requirements  as  to  the  drying  andl 
finishing  of  floors  were  eliminated  which  resulted  in  a  sav-"* 
ing  of  cost  to  the  contractor,  the  public  body  is  not  en- 
titled to  a  reduction  of  the  contract  price  nor  to  a  counter- 
claim for  the  amount  saved.  It  is  only  where  it  can  be 
shown  that  the  materials  become  injured  because  of  the 
omission,  or  were  inferior  to  that  required  by  the  specifica- 
tions that  any  basis  for  a  claim  by  the  public  body  could  arise.^ 

§  224.  Where  Public  Body  Increases  Work  to  be  Done — 
Changing  Conditions  at  Site. 
Where  a  contractor  is  obhged  to  remove  filling  or  other 
obstructions  placed  upon  the  fine  of  the  work  by  other 
contractors,  changing  the  condition  of  the  site  as  it  origi- 
nally was,  and  increasing  the  amount  of  the  contractor's 
work,  the  public  body  is  liable  for  the  additional  cost. 
Such  work  cannot  be  considered  either  as  an  obstruction 
or  incumbrance  or  as  a  change  of  condition  within  the 
contemplation  of  a  clause  of  the  contract  putting  upon  the 
contractor  the  burden  of  meeting  these.^ 

§  225.  Where  Contract  Requires  Complete  Performance 

for  Gross  Sum — Mistake  in  Plans. 

It  is  a  general  rule  that  if  a  contractor  interposes  a  gross 

bid  for  the  entire  performance  of  a  given  work,  he  assumes 

the  risk  as  to  the  nature  and  quantity  of  the  work  to  be 

1  Beinhauer  v.  Gleason,  15  N.  Y.  St.  R.  227,  119  N.  Y.  658,  23  N.  E.  1150; 
Conners  v.  U.  S.,  141  Fed.  16;  Dale  v.  U.  S.,  14  Ct.  CI.  514. 

*  Finucane  v.  Bd.  of  Educ,  supra. 

"  Rogers  v.  New  York,  71  N.  Y.  App.  Div.  618,  173  N.  Y.  623,  66  N.  E.  1115; 
Thilemann  v.  New  York,  82  N.  Y.  App.  Div.  136;  U.  S.  v.  Gibbons,  109  U.  S. 
200,  27  L.  Ed.  906,  aff'g  15  Ct.  CI.  174. 

335 


§  225  ]  CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

performed,  even  though  approximate  estimates  of  the 
quantities  which  are  materially  wrong  have  been  prepared 
by  the  pubhc  authorities  for  the  guidance  of  bidders.^ 
Accordingly  if  a  contractor,  to  remove  the  walls  of  a 
reservoir  for  such  gross  sum  is  required  to  do  considerable 
more  work  because  the  plan  does  not  show  correctly  the 
angle  of  slope,  he  may  not  recover  therefor, ^  even  though 
the  quantities  could  only  be  determined  by  a  careful 
mathematical  calculation  from  the  plan  on  the  assumption 
that  it  was  drawn  to  scale.  ^ 

§  226.  Representations  in  Plans  and  Specifications  which 
Prove  Erroneous. 

If  a  contractor  in  reliance  upon  a  representation  of 
existing  conditions  at  the  site  of  work  set  out  in  the 
specifications  or  plans  is  subsequently  required,  because 
the  representations  prove  untrue,  to  perform  extra  work  or 
incur  additional  expense,  he  is  entitled  to  recover  the 
reasonable  value  of  such  extra  work  or  expense  entailed.'* 
So  also  if  certain  appHances  are  furnished  by  the  pubhc 
body  and  represented  to  accomplish  certain  results,  within 
the  contemplation  of  the  contract,  during  its  perform- 
ance,^ or  are  to  be  constructed  to  accomplish  such  a 
purpose^  and  they  fail  entirely  or  prove  inadequate  and 

1  Lentilhon  v.  New  York,  102  N.  Y.  App.  Div.  548,  185  N.  Y.  549,  77  N.  E. 
1190;  Sullivan  v.  Pres.  Sing  Sing,  122  N.  Y.  389,  25  N.  E.  366.  See  Leary  v. 
Watervliet,  222  N.  Y.  337,  118  N.  E.  849. 

2  Lentilhon  v.  New  York,  supra. 

'  Lentilhon  v.  New  York,  supra.  See  Athol  v.  Long,  196  Mass.  497,  82  N.  E. 
665. 

*  Christie  v.  U.  S.,  237  U.  S.  234,  59  L.  Ed.  933;  Hollerbach  v.  U.  S.,  233  U.  S. 
165,  58  L.  Ed.  898;  U.  S.  v.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119;  Faber  v. 
New  York,  222  N.  Y.  255,  118  N.  E.  609;  King  v.  Duluth,  78  Minn.  155,  80 
N.  W.  874;  Capital  City  B.  &  P.  Co.  v.  Des  Moines,  136  Iowa,  243,  113  N.  W. 
835 

^  Horgan  v.  New  York,  160  N.  Y.  516,  55  N.  E.  204. 

« U.  S.  V.  Spearin,  248  U.  S.  132,  63  L.  Ed.  166. 

336 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  228 

thereby  extra  work  and  expense  is  put  upon  the  contrac- 
tor, he  may  recover  therefor.^  But  such  a  recovery  is  not 
permitted  to  a  contractor  who  claims  to  be  misled  by  the 
specifications  but  who  with  full  knowledge  of  the  facts 
enters  into  the  contract.^ 

§  227.  Omissions  and  Acts  of  Public  Body — Insufficiency  of 
Plans  and  Specifications. 

When  a  contractor  performs  work  under  a  contract, 
and  he  is  required  to  take  it  down  and  do  it  over  or  do 
it  in  a  different  manner  by  reason  of  the  insufficiency  of 
the  plans  and  specifications  and  not  from  a  non-compH- 
ance  with  such  plans  and  specifications,  he  is  entitled  to 
recover  the  value  of  extra  work  caused  thereby.^ 

§  228.  Where  Contract  Provides  for  Change  without 
Compensation  and  Extra  Work  is  Caused  by 
Error  of  Engineer. 

Where  labor  not  within  the  original  plan,  but  caused  by 
a  deviation  from  it  is  imposed  upon  a  contractor  through 
an  erroneous  change  of  grade  caused  by  the  engineer 
but  not  occasioned  by  an  intentional  change  from  that 
indicated  upon  the  plan  and  profile,  such  work  is  not 
within  the  terms  of  a  provision  permitting  a  change 
without  compensation.  If  in  the  correction  of  the  error 
the  contractor  performs  extra  labor  and  incurs  increased 
expense,  he  is  entitled  to  recover  according  to  its  value 
and  amount,  and  is  not  confined  to  the  rate  of  compensa- 
tion provided  for  similar  work  by  the  special  contract.'' 

1  Horgan  v.  New  York,  supra;  U.  S.  v.  Spearin,  supra. 

2  O'Rourke  v.  Philadelphia,  211  Pa.  79,  60  Atl.  499. 

3  Capital  City  B.  &.  P.  Co.  v.  Des  Moines,  136  Iowa,  243,  113  N.  W.  835; 
Bd.  of  Comm'ra,  Carroll  County  v.  O'Conner,  137  Ind.  622,  35  N.  E.  1006; 
Murphy  v.  U.  S.  13  Ct.  CI.  372. 

*  MulhoUand  v.  Mayor,  113  N.  Y.  631,  20  N.  E.  856. 

337 


§  228  ]  CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

WTiere  extra  work  is  made  necessary  because  of  improper 
and  erroneous  instructions  of  the  engineers  to  a  contractor  in 
the  blasting  out  of  a  tunnel,  and  extra  back  masonry  is  made 
necessary  by  reason  of  the  negligence  of  such  engineers,  the 
cost  of  such  extra  work  must  be  borne  by  the  public  body.^ 

§  229.  Caused  by  Errors  of  Engineer — Work  under  Special 
Statute. 
To  impose  liability  for  acts  of  an  engineer  in  charge  of 
work,  the  claim  must  be  consistent  with  the  terms  of  a 
special  statute  under  which  the  work  is  being  performed, 
and  the  contract  made  pursuant  thereto.  When  work  is 
being  done  by  an  agency  of  the  State  whose  powers  are 
limited  by  the  terms  of  such  special  statute,  which  pro- 
vides that  in  no  event  shall  the  city  be  made  liable  in  an 
action  brought  upon  the  contract  made  under  the  statute 
for  any  greater  or  other  obligation  than  that  expressed  in 
the  contract,  a  recovery  must  be  one  wholly  within  and 
justified  by  the  contract  terms.  Where  accordingly  extra 
work  is  caused  by  erroneous  grades  and  lines  furnished 
by  the  engineer  and  assumed  to  be  even  radical  and 
harmful  to  the  contractor,  no  recovery  can  be  had  since 
the  action  brought  is  necessarily  an  action  under  the 
contract  made  pursuant  to  the  statute,  and  since  the 
statute  prohibited  recovery  for  such  extra  cost,  except  in 
so  far  as  it  was  specifically  stated  in  the  contract,  no 
liability  could  arise  beyond  its  very  terms.  ^ 

§  230.  Contractor    Required    to    do    Over    Again    Work 
Already  Done  in  Accordance  with  Contract. 
Where  a  contractor  is  directed  by  the  engineer  to  do 

>  Chicago  V.  Duffy,  218  111.  242,  75  N.  E.  912. 

'  O'Brien  t;.  Mayor,  139  N.  Y.  543,  35  N.  E.  323;  Trenton  Co.  v.  U.  S.,  12 
Ct.  CI.  147. 

338 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  230 

work  a  second  time,  already  done  in  accordance  with  the 
contract,  he  may  under  protest  comply  with  the  directions 
of  the  engineer  and  recover  thereafter  the  reasonable 
value  of  the  work  on  the  theory  of  a  breach  of  contract.^ 
Or  where  the  authority  is  not  that  of  an  engineer  but  one 
who  has  authority  to  make  the  contract  and  to  waive  its 
provisions  or  change  it,  he  may  also  sustain  a  recovery 
upon  the  theory  of  implied  contract.^  Of  course,  he  is  not 
bound  to  do  the  work  a  second  time,  he  can  stop  work  and 
stand  upon  his  contention  that  the  work  is  properly  done, 
and  bring  his  action  to  recover  for  labor  and  materials 
furnished  under  the  contract  and  claim  his  prospective 
profits.^  Where  he  does  the  work  under  protest  and 
brings  an  action  for  damages  for  breach  of  contract 
because  he  is  unjustifiably  required  to  furnish  extra 
materials  and  do  extra  work  in  spite  of  his  protest,  there 
must  be  fair  room  for  debate  as  to  whether  the  directions 
of  the  engineer  were  or  were  not  justified  by  the  contract 
provisions.  It  does  not  matter  that  it  turns  out  that  the 
contractor  was  right  and  that  the  official  had  no  right  to 
call  on  him  to  furnish  the  materials  and  do  the  labor."* 
But  if  the  thing  required  is  clearly  beyond  the  limits  of 
the  contract,  the  contractor  may  not  even  under  protest 
do  it  and  subsequently  recover  damages.^  The  duty  of  a 
contractor   is   to   follow   no   directions   which   amount   to 

1  Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E.  804;Dwyer  v.  Mayor  of  N,  Y., 
77  N.  Y.  App.  Div.  224;  Lentilhon  v.  New  York,  102 Id.  548,  aff'd  185  N.  Y. 
549,  77  N.  E.  1190;  People  ex  rel.  Powers  &  M.  Co.  v.  Schneider,  191  N.  Y. 
523,  84  N.  E.  1118;  Borough  Cons.  Co.  v.  New  York,  200  N.  Y.  149,  93  N.  E. 
480. 

2  People  ex  rel.  McCabe  v.  Snedeker,  106  N.  Y.  App.  Div.  89,  97,  182  N.  Y. 
558,  75  N.  E.  1133. 

^  Gearty  v.  Mayor,  supra. 
*  Borough  Cons.  Co.  v.  New  York,  supra. 

5  Borough  Cons.  Co.  v.  New  York,  supra;  Becker  v.  New  York,  176  N.  Y. 
441,  68  N.  E.  855;  Leary  v.  Watervhet,  222  N.  Y.  337,  118  N.  E.  849. 

339 


§230]  contract:    CONSTRUCTION,    OPERATION     [  PART  HI 

material  modifications  of  the  contract,  or  plans  and 
specifications.  The  engineer  has  no  authority  in  this 
respect,  in  the  absence  of  express  authorization  from  the 
govemmg  body  or  of  acquiescence  in  a  departure  from  the 
terms  of  the  contract.^ 

§  231.  Where  Work  Done  and  Materials  Furnished  are 
Outside  Terms  of  Contract. 
WTiere  public  officers  have  power  to  bind  the  public 
body  for  work  done  and  materials  furnished  beyond  the 
pro\isions  of  the  contract,  a  recovery  for  the  reasonable 
value  thereof  may  be  had  in  the  absence  of  any  agreement 
as  to  the  cost  of  such  additional  labor  and  material. ^ 
The  pubUc  body  becomes  liable  upon  an  implied  contract 
to  pay  the  reasonable  value  of  such  extra  work.^  But  the 
contract  prices  so  far  as  the  work  is  of  the  same  character 
as  that  of  the  contract  will  govern  and  will  afford  the 
basis  of  recovery.*  If  these  provisions  cannot  apply 
because  the  extra  work  done  is  different,  then  the  rule  of 
reasonable  value  applies  and  recovery  is  based  upon  such 
value.^  If  the  method  provided  by  the  contract  is  that  a 
particular  officer  shall  estimate  the  amount  of  payment  to 

1  Becker  v.  New  York,  supra. 

2  Henderson  Bridge  Co.  v.  McGrath,  134  U.  S.  260,  33  L.  Ed.  934;  Thomas 
V  U.  S.,  32  Ct.  CI.  41;  McFerran  v.  U.  S.,  39  Ct.  CI.  441;  O'Hare  v.  Dist.  of 
Columbia,  18  Ct.  CI.  646;  Cooper  ;;.  U.  S.,  8  Ct.  CI.  199;  Grant  v.  U.  S.,  5  Ct. 
CI  71;  Gregory  v.  U.  S.  33  Ct.  CI.  434;  Callahan  Const.  Co.  v.  U.  S.  47  Ct.  CI. 
229;  Bd.  of  Comm'rs  Carroll  County  v.  O'Conner,  137  Ind.  622,  35  N.  E.  1006, 
37  U.  S.  16;  Dwyer  v.  Mayor,  77  N.  Y.  App.  Div.  224;  Gearty  v.  Mayor,  171 
N.  Y.  61,  63  N.  E.  804;  Turner  v.  Grand  Rapids,  20  Mich.  390;  Hasbrouck  v. 
Milwaukee,  21  Wis.  217. 

3  Bd.  of  Comm'rs  Carroll  County  v.  O'Conner,  supra;  Elgm  v.  Joslyn,  136 
111.  .52.5,  26  N.  E.  1090. 

<  Harrison  County  Comm'rs  v.  Byrne,  67  Ind.  21;  Bd.  of  Comm'rs  CarroU 
County  V.  O'Conner,  suj»-a;  Bd.  of  Comm'rs  Fulton  County  v.  Gibson,  158 
Ind.  471,  63  N.  E.  982;  Elgin  v.  Joslyn,  supra;  Clark  v.  Mayor,  4  N.  Y.  338; 
Merchants  Exch.  Co.  v.  U.  S.,  15  Ct.  CI.  270. 

6  Akin  t;.  Bloodgood,  12  Ala.  221;  Elgin  v.  Joslyn,  supra;  Bd.  of  Fulton 
County  V.  Gibson,  supra. 

340 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  231 

be  allowed  for  extra  work,  this  provision  will  bind.^  Where 
the  engineer  refuses  or  fails  to  issue  a  written  order  for 
work  of  the  character  here  considered,  but  does  so  under  a 
claim  that  the  work  is  included  in  the  contract,  and  that 
question  is  debateable  and  not  free  from  doubt,  and  the 
contractor  does  the  work  under  protest,  the  contractor, 
when  it  eventually  turns  out  that  he  was  right,  will  not  be 
precluded  from  recovering.  His  recovery  will  be  by  way 
of  breach  of  contract,  however,  based  both  upon  the 
ground  of  failure  to  perform  his  duty  and  issue  the  written 
order  and  for  compelling  the  contractor  to  do  something 
not  fairly  required  by  his  contract.  But  where  the 
engineer  orders  the  contractor  to  do  something  clearly 
outside  the  contract  he  cannot  do  it  even  under  protest 
and  subsequently  recover  damages.^  But  if  the  public 
body,  which  has  the  power  to  make  the  contract,  gives 
such  a  direction  to  a  contractor,  whether  it  insists  that  the 
work  is  within  the  contract  and  in  fact  it  is  clearly  without 
the  contract,  is  of  no  moment.  The  public  body  can 
waive  the  provision  of  the  contract  requiring  a  written 
order,  a  thing  which  the  engineer  cannot  do.  So  that 
whether  the  work  eventually  is  declared  to  be  debateably 
or  clearly  outside  the  contract  is  of  no  concern  to  the 
courts.  If  the  work  was  debateably  outside  or  clearly 
without  the  contract  provisions  there  is  in  either  case  a 
breach  of  contract  for  which  the  public  body  must  respond 
in  damages.^ 

» Rens  V.  Grand  Rapids,  73  Mich.  237,  41  N.  W.  263;  Haebrouck  v.  Mil- 
waukee,   17  Wis.  266. 

2  Uvalde  Asphalt  Pav.  Co.  v.  New  York,  154  N.  Y.  App.  Div.  112,  211 
N.  Y.  560,  105  N.  E.  1100;  Borough  Cons.  Co.  v.  New  York,  200  N.  Y.  149, 
93  N.  E.  480  (act  of  engineer). 

» Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E.  804  (public  body  itself);  Dwyer 
1^.  New  York,  77  N.  Y.  App.  Div.  224,  (public  body  itself);  Pacific  Bridge 
Co.  c.  Clackamas  County,  45  Fed.  217. 

341 


§231]        contract:  construction,  operation    [part  hi 

Thus  where  a  contract  calls  for  the  grading  of  an 
existing  street,  the  grade  of  which  had  not  been  legally 
changed  when  the  contract  was  executed,  and  regrading 
was  not  called  for  by  the  contract,  such  work  will  not 
be  considered  as  within  the  contemplation  of  the  parties 
when  the  contract  was  made  and  therefore  not  included 
\\-ithin  the  contract,  and  if  the  contractor  is  ordered  to  do 
such  work,  and  performs  it  under  protest,  he  may  recover 
for  a  breach  of  his  contract,  in  that  he  is  required  to  do 
work  not  covered  by  his  contract.^  Where  the  action  is 
thus  for  damages  for  breach  of  the  contract,  the  contractor 
is  entitled  to  recover  according  to  its  value  and  amount, 
and  is  not  limited  by  the  rate  of  compensation  provided 
for  similar  work  by  the  special  contract.^  Where  a  con- 
tract for  street  pa\dng  required  a  stated  amount  of  sand 
beneath  the  pavement  and  the  public  body  graded  the 
street,  so  that,  to  confonn  the  pavement  to  this  grade, 
much  more  sand  became  necessary,  the  public  body 
became  liable  for  the  extra  material  furnished.^ 

§  232.  Extra  Work  Caused  by  Failure  of  Public  Body  to 
Perform  Its  Part  of  Contract — or  by  Delay. 
If  the  public  body  under  its  contract  obligates  itself  to 
do  part  of  the  work  or  to  furnish  certain  appliances  at  the 
site,  or  to  construct  them  either  independently,  or  under 
the  contract,  and  it  fails  to  do  its  part  of  the  work  or 
furnish  the  appliances,  or  if  when  the  appliances  are 
furnished  or  even  constructed,  they  fail  to  operate  or  to 
accomplish   the  purpose  which   the  parties  intended  and 

1  Uvalde  A.  P.  Co.  v.  New  York,  154  N.  Y.  App.  Div.  112,  211  N.  Y.  560, 
105  N.  E.  1100. 

2  Mulholland  v.  Mayor,  113  N.  Y.  631,  20  N.  E.  856. 

'  Messenger  v.  Buffalo,  21  N.  Y.  196.  See  Allen  v.  Melrose,  184  Mass.  1, 
67  N.  E.  1060. 

342 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  233 

upon  which  as  a  basis  the  parties  contracted,  the  pubHc 
body  is  responsible  for  any  extra  work  or  expense  entailed 
through  its  fault. ^  So,  if  it  delays  in  the  doing  of  that 
which  the  contract  requires  it  to  do,  a  similar  liabihty 
follows.-  If  it  undertakes  to  supply  a  part  of  the  materials 
to  be  used  upon  the  construction  of  a  building  or  work  and 
extra  work  or  expense  is  caused  in  using  it  and  installing 
it  into  the  work  because  it  is  different  than  the  kind  which 
the  contract  requires,  such  added  cost  may  be  recouped 
from  the  public  body.^  Thus  where  brick  is  furnished  by 
the  public  body  which  is  different  from  the  usual  kind  and 
extra  expense  is  entailed  in  lajang  it,  and  the  delay  of  the 
public  body  carries  the  performance  of  the  contractor's 
work  into  the  winter,  and  such  fact  causes  further  expense, 
the  reasonable  cost  of  these  may  be  recovered.*  But  an 
allowance  made  to  a  contractor  for  delay  caused  by  the 
removal  of  extra  fill  placed  upon  the  line  of  the  work  by 
another  contractor  is  not  a  defense  to  the  contractor's 
claim  for  extra  work  in  removing  the  fill.^ 

§  233.  Where  Estimated  Quantites  are  Approximate  only 
and  Work  or  Material  Ordered  is  Within  Con- 
templation of  Parties. 
If  the  proposals  accompanying  a  contract  for  furnishing 
materials  for  a  definite  period  state  that  an  approximate 
estimate    of    quantities    is    given    and    the    specifications 
indicate  that  these   estimates   are  given  only  as  a  guide 

» Horgan  v.  New  York,  160  N.  Y.  516,  55  N.  E.  204;  U.  S.  v.  Spearin,  248 
U.  S.  132,  63  L.  Ed.  166;  Wood  v.  Ft.  Wayne,  119  U.  S.  312,  30  L.  Ed.  416; 
Owen  V.  U.  S.  44  Ct.  CI.  440;  U.  S.  v.  Atlantic  Dredging  Co.,  253  U.  S.  1,  64 
L.  Ed.  735. 

2  Owen  V.  U.  S.,  44  Ct.  CI.  440  ;Wood  v.  Ft.  Wayne,  119  U.  S.  312,  30  L.  Ed. 
416;  U.  S.  V.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 

'  Owen  V.  U.  S.,  supra. 

*  Idem. 

*  Thilemann  v.  New  York,  82  N.  Y.  App.  Div.  136. 

343 


§  233  ]  CONTRACT :    CONSTRUCTION,    OPERATION     [  PART  III 

to  the  bidder,  but  are  in  no  way  to  bind  or  limit  the 
public  body  as  to  the  amount  which  is  to  be  ordered,  the 
contract  entered  into  will  bind  the  contractor  to  furnish 
all  the  classes  of  materials  which  might  be  required  by  the 
pubhc  body  during  the  year  and  will  bind  the  public  body 
to  pay  the  price  agreed  for  all  materials  ordered  and 
accepted.  In  such  a  situation  the  \ital  and  essential 
term  of  the  contract  is  to  dehver  all  the  material  which 
the  pubhc  body  requires  for  the  purposes  stated.  When, 
therefore,  it  orders  quantities  in  excess  of  the  estimated 
quantities  the  contractor  is  bound  by  the  contract  prices 
and  is  not  entitled  to  be  paid  at  market  rates.  ^ 

§  234.  Exceeding  Appropriation. 

In  those  jurisdictions  in  which  recovery  is  denied,  except 
upon  a  contract  in  writing,  the  municipality  may  not 
appropriate  compensation  for  extra  work  except  upon  a 
contract  in  writing.  No  claun  for  such  extra  work  can 
bind  the  municipality  to  pay  for  work  done  under  the 
WTitten  contract  but  outside  of  it  for  which  the  municipal- 
ity has  paid  the  price  stipulated  in  the  contract.  Such 
pajTnent  would  be  in  excess  of  the  original  appropriation 
and  cannot  be  lawfully  made,  and  the  fact  that  there  is  a 
further  appropriation,  is  of  no  avail  since  there  is  no 
written  contract  to  support  its  payment." 

§  235.  Where  Contract  Makes  Provision  for  Extra  Work 
at  Contract  Prices,  these  Control. 

WTiere  a  change  in  plan  is  not  radical,  and  the  contract 
provides  that  alterations  may  be  made  by  order  of  the  engi- 

»  National  Bldg.  Supply  Co.  v.  Baltimore,  100  Md.  188,  59  Atl.  726.  See 
First  Nat.  Bk.  v.  Syracuse,  122  N.  Y.  App.  Div.  172,  195  N.  Y.  587,  89  N.  E. 
1100. 

2  O'Rourke  v.  Philadelphia,  211  Pa.  St.  79,  60  Atl.  499.  See  Grant  v.  U.  S. 
5  Ct.  CI.  71. 

344 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  236 

neer,  and  if  the  public  body  increases  the  amount  of  the  work, 
such  increase  shall  be  paid  for  according  to  the  quantity 
actually  done  and  at  the  price  fixed  by  the  contract, 
no  claim  for  extra  compensation  may  be  made  since  such 
work  is  covered  by  the  contract  and  the  prices  fixed  by  it.^ 

§  236.  Provision  that  Same  Shall  be  Paid  for  at  Contract 
Price  only  Applies  to  Reasonably  Proportionate 
Increase. 
The  provision  in  public  contracts  that  the  contractor 
shall  perform  such  extra  work  or  make  alterations  in 
connection  with  the  work  specified  in  the  contract  as  the 
engineer  or  other  officer  may  direct,  is  limited  in  its  mean- 
ing and  effect  by  reason,  and  by  the  object  of  the  contract 
to  such  extra  work  of  proportionately  small  amounts  as  is 
necessary  to  the  completion  of  the  work  contemplated  by 
the  parties  ^  and  to  such  modifications  of  the  contemplated 
work  as  do  not  radically  change  its  nature  and  its  cost.^ 
This  restriction  is  as  effectually  a  part  of  the  contract  as 
if  it  were  written  into  the  agreement  in  so  many  words.* 
Therefore,  where  material  quantities  of  extra  work  or  of 
alterations  are  required,  substantially  variant  in  character 
and  cost  from  that  contemplated  by  the  parties  when  they 
made  their  agreement,  such  will  be  considered  to  constitute 
new  and  different  work  not  governed  by  the  terms  of  the 
agreement,  for  which  the  contractors  may  recover  its 
reasonable  value. ^     Sometimes  under  a  reserved  power  to 

1  Allen  V.  Melrose,  184  Mass.  1,  67  N.  E.  1060. 

2  Salt  Lake  City  v.  Smith,  104  Fed.  457,  465;  County  of  Cook  v.  Harms,  108 
111.  151;  Chicago  v.  McKechney,  205  111.  372,  68  N.  E.  954;  Elgin  v.  Joslyn, 
136  111.  525,  531,  26  N.  E.  1090. 

'  County  of  Cook  v.  Harms,  supra;  Salt  Lake  City  v.  Smith,  supra;  Mo 
Master  v.  State,  108  N.  Y.  542,  15  N.  E.  417;  National  Cont.  Co.  v.  Hudson 
River  W.  P.  Co.,  192  N.  Y.  209,  84  N.  E.  965. 

*  Salt  Lake  City  v.  Smith,  supra. 

5  Salt  Lake  City  v.  Smith,  supra;  McMaster  v.  State,  108  N.  Y.  542,  15  N.  E. 

345 


§  236  ]  CONTRACT :   CONSTRUCTION,    OPERATION      [  PART  III 

order  extra  work,  attempts  are  made  to  make  radical 
changes  in  the  character  of  the  work  so  that  it  no  longer 
resembles  the  work  contracted  to  be  done.  Such  reserved 
right  does  not  authorize  a  reduction  in  the  number  of 
wings  or  stories  planned  in  a  public  building,  or  a  change 
from  stone  to  wood  or  to  brick.  It  will  not  authorize  a 
complete  change  in  plan  which  is  subversive  of  the  very 
contract  purpose,  or  a  change  in  the  general  character  of 
the  building  or  work  intended.  While  it  is  difficult  to 
draw  the  line  of  limitation  between  what  it  will  authorize 
and  what  it  will  not,  it  will  of  course  include  such  changes 
as  frequently  'occur  in  the  process  of  constructing  buildings 
or  public  works,  in  matters  of  taste,  arrangement  and 
details.^  A  public  body  contracting  to  build  a  masonry 
dam  may  not  change  it,  under  such  a  reserved  right  to 
make  alterations,  from  a  masonry  dam  to  an  earth  dam 
with  a  masonry  core.^ 

§  237.  Unforeseen  Obstructions  or  Difficulties — Outside 
Contract. 
A  provision  in  a  contract  that  all  loss  or  damage  arising 
out  of  the  nature  of  the  work  to  be  done  under  the  con- 
tract, or  from  any  unforeseen  obstructions  or  difficulties 
which  may  be  encountered  in  its  prosecution,  only  applies 
to  the  work  to  be  done  and  to  the  unforeseen  obstructions 
or  difficulties  which  may  be  encountered  under  the  agree- 
ment. Where  an  unforeseen  obstruction  which  subjects  a 
contractor  to  a  large  amount  of  extra  work  is  entirely 
outside  of  the  contract,  it  stands  entirely  unaffected  by 

417;  National  Ck)nt.  Co.  v.  Hudson  River  W.  P.  Co.,  192  N.  Y.  209,  84  N.  E. 
965;  County  of  Cook  v.  Harms,  supra;  Chicago  v.  McKechney,  supra. 

»  McMaster  v.  State,  supra;  Nat.  Cont.  Co.  v.  Hudson  River  W.  P.  Co., 
supra. 

'  Nat.  Cont.  Co.  v.  Hudson  Riv.  W.  P.  Co.,  supra. 

346 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  237 

such  a  provision  and  if  it  relates  to  a  duty  owed  by  the 
public  body  to  the  contractor  or  the  failure  of  appliances 
furnished  for  his  use,  it  will  render  the  former  liable  for  the 
extra  work  caused.^ 

If  a  contractor  in  the  course  of  performance  of  his  work 
encounters  extraordinary  conditions  or  unforeseen  dif- 
ficulties and  obstructions,  and  on  account  of  these  the 
work  proves  more  expensive,  he  cannot  thereby  recover 
additional  compensation.  Ordinarily  he  assumes  the  risk 
and  perils  of  the  work  and  unless  there  be  some  representa- 
tion or  warranty  by  the  public  body  he  cannot  escape 
them  and  shift  the  cost  in  violation  of  the  obligations  of 
his  contract. 2  This  is  especially  true  in  those  cases  where 
his  contract  is  an  absolute  contract  to  do  all  the  work  and 
furnish  all  necessary  labor  and  material,^  and  in  those 
cases  where  the  burden  is  placed  upon  him  by  the  terms 
of  the  contract  to  satisfy  himself  of  the  accuracy  of  state- 
ments or  of  estimates  and  the  public  body  disclaims  any 
liability  for  discrepancies.^  Where  such  extra  cost  is 
consequent  upon  performance  of  the  exact  terms  of  the 
contract,  the  contractor  cannot  claim  payment  for  extra 
work.^  So  where  a  contract  puts  the  risk  from  sudden 
influx  of  water  into  the  work  upon  the  contractor  and 
obligates  him  to  be  prepared  to  remove  it  promptly,  if 
the  work  is  more  laborious  or  more  expensive  than  he 

1  Horgan  v.  New  York,  160  N.  Y.  516,  55  N.  E.  204. 

2  Riley  v.  Brooklyn,  46  N.  Y.  444;  Penn.  Bridge  Co.  v.  Kershaw  County, 
226  Fed.  728;  Devlin  v.  Mayor,  4  Duer,  337;  Chicago  v.  Duffy,  179  111.  447, 
53  N.  E.  982;  Leavitt  v.  Dover,  67  N.  H.  94,  32  Atl.  156;  Owens  v.  Butler 
County,  40  Iowa,  190. 

»  McCauley  v.  Des  Moines,  83  Iowa,  212,  48  N.  W.  1028;  Trenton  v.  Bennett, 
27  N.  J.  L.  513. 

^Mau-3  V.  Mayor,  52  N.  Y.  App.  Div.  343,  166  N.  Y.  618,  59  N.  E.  1126; 
Semper  v.  Duffey,  227  N.  Y.  151,  124  N.  E.  743;  Kelly  v.  New  York,  87  N.  Y. 
App.  Div.  299, 180  N.  Y.  507,  72  N.  E.  1144. 

6  Slattery  v.  Mayor,  31  N.  Y.  App.  Div.  127,  165  N.  Y.  618,  59  N.  E.  1130. 

347 


§  237  ]  CONTRACT :   CONSTRUCTION,    OPERATION     [  PART  III 

anticipates  he  cannot  rightfully  ask  the  public  body  to 
carry  a  burden  for  him  which  he  assumed.^ 

WTiere  a  contractor  agreed  to  keep  an  excavation  clear 
of  water,  from  whatever  source,  during  the  work,  and 
he  was  required  to  make  good  any  damage  which  his 
work  might  sustain  from  any  cause  before  final  acceptance, 
he  could  not  make  a  claim  against  the  pubhc  body  for 
damage  caused  by  a  freshet  in  the  river  at  the  site  of  the 
work,  and  for  the  cost  of  recleaning  or  repainting  his 
work.-  A  contractor  takes  the  risk  of  the  prices  of  labor 
and  materials  which  he  is  bound  to  furnish  to  complete  a 
specified  job  agreed  to  be  done  at  a  fixed  price.  It  is  of 
necessity  one  of  the  elements  which  he  takes  into  account 
when  he  makes  his  bargain,  and  he  cannot  expect  the 
other  party  to  guarantee  him  against  unfavorable  changes 
in  those  prices.^ 

§  238.  Caused  by  Failure  of  Contractor  to  Properly  Per- 
form His  Contract. 

If  a  contractor  fails  to  perform  his  contract  in  the 
manner  required,  but  on  the  contrary  performs  his  work 
in  violation  of  the  terms  of  his  contract,  or  defectively, 
and  extra  work  becomes  necessary  on  this  account,  he  is 
not  entitled  to  recover  therefor.* 

So  where  a  contract  provided  that  brick  which  was  to 
be  placed  in  the  walls  of  a  school  building  should  be 
thoroughly  wet  before  being  laid  in  the  walls,  and  part 
of   the   walls   were   constructed,   when   the   architect   dis- 

1  Buraham  v.  Milwaukee,  100  Wis.  55,  75  N.  W.  1014. 

2  Johnson  t;.  Albany,  86  N.  Y.  App.  Div.  567. 

'  Chouteau  v.  U.  S.,  95  U.  S.  61,  24  L.  Ed.  371.  See  Gordon  v.  State,  233 
N.  Y.  1. 

*  Phoenix  Bridge  Co.  v.  U.  S.,  211  U.  S.  188,  53  L.  Ed.  141,  aff'g  38  Ct.  CI. 
492;  Bowe  v.  U.  S.,  42  Fed.  761;  Archer  v.  Franklin  County  Sch.  Dist.,  78 
Wash.  20,  138  Pac.  299. 

348 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  238 

covered  this  provision  had  been  disregarded,  and  he 
ordered  the  wall  torn  down  and  replaced  according  to  the 
contract,  no  recovery  for  extra  work  occasioned  will  be 
permitted.^ 

If  a  contract  allows  false  work  to  be  used  in  constructing 
a  bridge  over  a  navigable  river  during  the  non-navigable 
period,  the  duty  is  imposed  after  that  period,  if  the  exigen- 
cies of  the  situation  require  it,  to  perform  the  work  in 
some  other  suitable  manner  consistent  with  the  non- 
interruption  of  navigation  in  the  river.  Therefore,  if  a 
contractor  is  required  to  erect  a  lift  span,  he  may  not 
recover  therefor  as  the  work  was  not  extra  work  but 
clearly  within  the  contract.^ 

§  239.  Decision  of  Engineer. 

The  stipulation  in  public  contracts  that  all  questions  and 
differences  which  may  arise  between  the  public  body  and 
the  contractor  under  the  contract  shall  be  referred  to 
the  engineer,  and  his  decision  shall  be  final  and  conclusive, 
does  not  give  the  engineer  jurisdiction  to  determine  that 
work,  which  is  not  done  under  the  contract  or  specifica- 
tions, and  which  is  not  governed  by  them,  was  performed 
under  and  is  controlled  by  the  agreement,  and  his  decision 
to  that  effect  is  not  binding.^  Not  having  jurisdiction  of 
that  question,  he  cannot  confer  it  upon  himself  by  er- 
roneously deciding  that  he  has  it.^ 

Where  the  contract  provides  for  a  decision  by  the 
engineer  on  the  question  of  extra  work  it  is  binding  and 
conclusive,^  unless  it  is  unjust,  partial,  dishonest,  arbitrary 

^  Archer  v.  Franklin  County  Sch.  Dist.,  supra. 
2  Phoenix  B.  Co.  v.  U.  S.,  supra. 

'  Salt  Lake  City  v.  Smith,  104  Fed.  457;  U.  S.  v.  Smith,  256  U.  S.  11. 
*  Salt  Lake  City  v.  Smith,  supra. 

6  Long  V.  Pierce  County,  22  Wash.  330,  61  Pac.  142;  Hasbrouck  v.  Milwaukee, 
17  Wis.  266;  Kennedy  v.  U.  S.,  24  Ct.  CI.  122. 

349 


§  239  ]       contract:  construction,  operation    [  part  hi 

or  palpably  wrong. ^  The  question  whether  it  is  just  and 
impartial  or  arbitrary  is  for  the  jury.^  In  a  case,  however, 
where  the  action  is  not  under  the  contract  for  extra  work 
but  to  recover  damages  for  breach  of  the  contract,  the 
production  of  a  certificate  is  not  necessary,  since  the 
provision  requiring  a  certificate  has  no  application.^  But 
this  pro\ision  of  a  contract  may  be  waived,  and  is  waived 
by  a  modification  which  provides  that,  in  event  of  dif- 
ferences the  contractor  shall  do  the  w^ork  under  protest. 
Such  a  provision  will  leave  the  adjudication  of  the  con- 
tractor's rights  open  without  impairment  until  after  the 
full  completion  of  the  contract.^ 

§  240.  Conditions  Precedent  to  Recovery  for  Extra  Work. 

Any  limitations  upon  the  time  within  which  or  the 
manner  in  which  claims  for  extra  work  shall  be  presented 
or  sustained  must  be  complied  with  before  recovery  is 
allowed,  as  these  are  generally  held  to  be  conditions  pre- 
cedent to  such  recovery.^  The  valuation  of  the  work 
claimed  as  extra  by  the  engineer  is  such  a  condition 
precedent.^  But  since  conditions  are  not  favored  it  must 
appear  that  it  was  intended  to  be  a  condition  precedent 
before  the  courts  will  so  declare  it.''  The  obtaining  by 
arbitration  of  an  adjustment  of  value  of  extra  work  will 

1  Long  V.  Pierce  County,  supra;  King  v.  Duluth,  78  Minn.  155,  80  N.  W. 
874;  O'Brien  v.  Mayor,  139  N.  Y.  543,  35  N.  E.  323. 

2  Long  V.  Pierce  County,  supra. 

3  Gearty  v.  Mayor,  171  N.  Y.  61,  74,  63  N.  E.  804. 
*  Galveston  v.  Devlin,  84  Tex.  319, 19  S.  W.  395. 

B  Johnson  v.  Albany,  86  N.  Y.  App.  Div.  567;  Ryder  Bldg.  Co.  v.  Albany, 
187  Id.  868;  Capital  City  B.  &  P.  Co.  v.  Des  Moines,  136  Iowa,  243,  113  N.  W. 
835;  Burnham  v.  Milwaukee,  100  Wis.  55,  75  N.  W.  1014;  Beattie  v.  McMullen, 
82  Conn.  484,  74  Atl.  767;  Stroebel  Steel  Cons.  Co.  v.  Chicago  San.  Dist.,  160 
111.  App.  554. 

6  Kennedy  v.  U.  S.,  24  Ct.  CI.  122. 

7  Strobel  v.  Sanitary  Dist.  Chicago,  160  111.  App.  554. 

350 


CHAP.  XXXVI  ]  EXTRA   WORK  [  §  241 

not   be   considered   a   condition   precedent   to   a   right   of 
action.^ 

§  241.  Contractor  not  Bound  to  Perform  or  Public  Body 
to  Let  it  to  Him  Unless  Contract  so  Provides. 

A  contract  which  provides  for  a  certain  definite  work  to 
be  done  and  which  does  not  directly  or  by  impHcation 
obligate  the  contractor  to  do  extra  work,  leaves  the  parties 
to  the  contract  free  in  the  matter  of  extra  work.  The  pub- 
Uc  body  may  let  it  to  the  contractor,  if  the  contractor  is 
willing  to  perform  it.  But  the  public  body  may  if  it 
chooses  let  such  work  to  another  person  and,  on  the  other 
hand,  the  contractor  if  requested  to  do  such  work  is  not 
obligated  to  perform  it.  It  is  matter  for  new  agreement 
of  the  parties. 2 

1  Preston  v.  Syracuse,  92  Hun,  301,  158  N.  Y.  356,  53  N.  E.  39;  Milwaukee 
V.  Hasbrouck,  17  Wis.  266. 

2  See  Morgan  v.  Baltimore,  58  Md.  509;  Collins  v.  U.  S.,  34  Ct.  CI.  294. 


351 


PART  IV.    RESCISSION 

CHAPTER  XXXVII 

RESCISSION  OF  CONTRACT 

§  242.  Rescission — Right   of   Public   Bodies    to   Rescind 
Contracts. 

Public  bodies  have  no  sovereign  right  to  rescind  agree- 
ments at  their  mere  pleasure.  Such  contracts  can  only  be 
rescinded  under  the  same  conditions  and  subject  to  the 
same  hability  as  natural  persons.^  There  is  not  one  law 
for  the  sovereign  and  another  for  the  subject.  When  the 
sovereign  engages  in  business  and  the  conduct  of  business 
enterprise  and  contracts  with  individuals,  when  such  con- 
tract comes  up  before  the  court  for  construction,  the  rights 
and  obligations  of  the  parties  must  be  adjusted  upon  the 
same  principles  as  if  both  contracting  parties  were  private 
persons.  Both  stand  upon  equality  before  the  law  and  the 
sovereign  is  merged  in  the  dealer,  contractor  and  suitor. ^ 
After  a  contract  has  been  lawfully  entered  into,  it  cannot 
be  annulled  by  a  public  body  by  reconsidering  its  approval. 
A  contract  creates  fixed  and  perfect  legal  obligations, 
wholly  detached  from  a  locus  pcenitentioe  and  not  subject 
to  reconsideration.  It  is  a  contradiction  in  terms  to  speak 
of  a  contract  revocable  at  will  of  a  contracting  party.  ^ 
Mere  negotiations  which  contemplate  a  written  contract, 

1  People  ex  rel.  Graves  v.  Sohmer,  207  N.  Y.  450,  101  N.  E.  164. 
^  People  V.  Stephens,  71  N.  Y.  549;  People  ex  rel.  Graves  v.  Sohmer,  supra. 
'  People  ex  rel.  Graves  v.  Sohmer,  supra;  Safety  I.  W.  Co.  v.  Baltimore, 
66  Fed.   140. 

353 


§  242  ]  RESCISSION  [  PART  IV 

followed  by  a  vote  of  the  governing  body  to  accept  a  bid, 
will  not  constitute  a  contract  for  the  work  and  may  later 
be  reconsidered.^  Public  contracts  may  be  discharged  by 
mutual  agreement  of  the  parties  -  and  of  course  are  dis- 
charged by  performance,  by  operation  of  law  and  by 
breach.  One  contract  substituted  for  another  discharges 
the  latter.^  Discharge  by  breach  may  occur  by  one  party 
renouncing  or  repudiating  the  contract  and  refusing  to  be 
further  bound  by  it.**  A  public  body  may  discharge  and 
terminate  a  contract  by  making  it  impossible  for  it  to  per- 
form its  part  of  the  contract,^  but  it  may  not  thus  dis- 
charge its  hability  under  the  contract.^  A  contract  which 
is  ^•oid  may  be  rescinded  for  that  reason.' 

§  243.  Reserved  Right  to  Terminate. 

Where  the  pubUc  body  reserves  the  right  to  terminate 
the  contract,  the  exercise  of  the  option  pursuant  to  such 
provision  will  be  strictly  construed.^  It  may  reserve  the 
arbitrary  right  of  termination^  or  the  right  to  annul  for 
failure  to  properly  perform  the  work.^°  If  the  pubUc  body 
reserves  the  privilege  to  terminate  in  the  event  that  the 
work  is  not  done  satisfactorily,  reasonable  grounds  must  exist 
for  such  dissatisfaction  and  the  exercise  of  the  right  must 

1  McCormick  v.  Oklahoma  City,  203  Fed  921. 

2  Bd.  of  Commr's  v.  Speer,  124  Ark.  337,  187  S.  W.  315. 
'  Bd.  of  Commr's  v.  Speer,  suiwa. 

*  U.  S.  V.  Behan,  110  U.  S.  338,  28  L.  Ed.  168. 
5  Kingsley  v.  Brooklyn,  78  N.  Y.  200,  216. 

°  Kingsley  v.  Brooklyn,  supra;  Danolds  v.  State,  89  N.  Y.  36,  42  Am.  Rep. 
277. 

^  East  St.  Louis  G.  L.  Co.  v.  East  St.  Louis,  47  111.  App.  411;  McKee  v. 
Greensburg,  160  Ind.  378,  66  N.  E.  1009;  Hart  v.  New  York,  201  N.  Y.  45, 
94  N.  E.  219. 

8  Cody  V.  N.  Y.,  71  N.  Y.  App.  Div.  54;  People  v.  Coler,  56  N.  Y.  App.  Div. 
98;  Morgan  v.  Baltimore,  58  Md.  509. 

*  Bietry  v.  New  Orleans,  24  La.  Ann.  21. 

•»  Powers  V.  Yonkers,  114  N.  Y.  145,  21  N.  E.  132. 

354 


CHAP.  XXXVII  ]       RESCISSION   OF   CONTRACT  [  §  244 

be  free  from  arbitrary  action.^  The  language  of  the  con- 
tract may  be  sufficiently  broad  to  admit  of  absolute  tenni- 
nation  by  the  public  body  whose  judgment  may  not  be 
questioned,  or  it  may  be  lodged  with  the  engineer  in  charge 
to  decide  whether  the  contractor  is  proceeding  with  proper 
speed  and  diligence.  His  decision  is  final  in  the  absence  of 
fraud  or  bad  faith.-  But  where  his  action  has  no  sufficient 
basis  to  rest  upon  or  is  without  any  support,  it  will  not  be 
sustained. 3  The  public  body  cannot  exercise  a  reserved 
power  of  annulment  because  of  default  in  performance  if 
this  has  been  occasioned  by  the  public  body.''  If  the  power 
can  only  be  exercised  by  giving  notice,  the  exact  notice 
provided  must  be  given. ^ 

§  244.  Abandonment  of  Right  of  Rescission. 

The  public  body  will  be  deemed  to  abandon  its  right  to 
declare  a  forfeiture  of  the  contract  where  it  fails  to  ex- 
pressly declare  the  contract  forfeited,  but  on  the  other  hand 
tacitly  acquiesces  in  the  abandonment  of  the  contract  by 
the  contractor,  and  the  acts  of  the  parties  will  be  con- 
sidered to  have  effected  a  mutual  abandonment  and  a  for- 
feiture will  not  be  permitted.^  Where  all  the  work  under 
several  contracts  has  been  abandoned  by  mutual  agree- 
ment, no  recovery  may  be  had  in  an  action  for  anticipated 
profits  on  the  work  so  abandoned.^ 

1  Harder  v.  Marion  Co.  Commr'e,  97  Ind.  455;  Starin  v.  U.  S.,  31  Ct.  CI. 
65;  Wakefield  Con.  Co.  v.  New  York,  157  N.  Y.  App.  Div.  535,  213  N.  Y 
633,  107  N.  E.  1087;  Smith  Con.  Co.  v.  New  York,  167  N.  Y.  App.  Div.  253. 

2  Taylor  ;;.  New  Castle  County,  17  Del.  555,  43  Atl.  613;  Davis  v.  State, 
146  Ala.  120,  41  So.  681;  Jones  v.  New  York,  32  Misc.  221,  60  N.  Y.  App. 
Div.  161. 

^Wakefield  Con.  Co.  v.  N.  Y.,  supra;  Smith  Con.  Co.  v.  N.  Y.,  supra. 
'  King  V.  U.  S.,  37  Ct.  CI.  428. 

5  Indianapolis  v.  Bly,  39  Ind.  373;  Henderson  Bridge  Co  v,  O'Connor,  88  Ky. 
303,  11  S.  W.  18;  GaUo  v.  N.  Y.,  15  N.  Y.  App.  Div.  61. 
«  Satterlee  v.  U.  S.,  30  Ct.  CI.  31. 
7  Badger  Mfg.  Co.  v.  U.  S.,  49  Ct.  CI.  538. 

355 


§  245  ]  RESCISSION  [  PART  IV 

§  245.  Grounds  for  Rescission. 

\Miere  one  party  sees  fit  to  rescind  or  abandon  a  con- 
tract he  must  base  such  action  on  sufficient  grounds.^ 
\Miere  a  contract  contains  stipulations  which  permit  a 
pubUc  body  to  abrogate  it  in  certain  specified  cases  but  do 
not  confer  arbitrary  power  to  annul  it,  the  pubUc  body 
may  not  terminate  it  upon  the  theory  that  the  contractor 
was  not  a  proper  person  to  perform  the  work.^  Mistake  is 
of  course  an  appropriate  ground  for  rescission  in  equity  ^ 
but  it  must  be  such  a  mistake  as  relates  to  material  mat- 
ters and  not  merely  be  the  assumption  of  a  bad  bargain.^ 
When  a  contract  has  been  executed  and  is  rescinded  for 
mistake  the  one  who  has  performed  is  entitled  to  recover 
the  fair  and  reasonable  value  of  the  services  rendered  or  of 
materials  and  suppUes  furnished  under  it,^  or  he  may  re- 
cover back  the  money  paid  or  the  property  delivered  under 
it.®  Even  though  the  contract  is  not  completed  there  may 
be  rescission  for  a  unilateral  mistake  in  the  offer  or  pro- 
posal and  in  the  preUminary  negotiations  so  far  as  they 
have  proceeded.^  So  also  misrepresentations  or  fraud,  when 
they  affect  a  material  term  of  the  contract,  furnish  good 
ground  for  rescission  to  the  innocent  party.  ^  One  induced  by 
fraud  to  enter  into  a  contract  relying  upon  such  inducement 
may  rescind  the  contract.^     He  may,  however,  if  he  chooses, 

1  Becker  v.  PhUadelphia,  16  Atl.  625,  5  Pa.  C.  C.  97. 

2  PurceU  Envelope  Co.  v.  U.  S.,  47  Ct.  CI.  1,  s.  c.  249  U.  S.  313,  63  L.  Ed. 
260. 

'  Indianapolis  Bd.  v.  Bender,  36  Ind.  App.  164,  72  N.  E.  154;  Gibbs  v. 
GerardsviUe  Sch.  Dist.,  195  Pa.  St.  396,  46  Atl.  91;  Long  v.  Athol,  196  Mass. 
497,  82  N.  E.  665;  Clarke  Con.  Co.  t'.  N.  Y.,229  N.  Y.  413,  128  N.  E.  241. 

*  Southington  v.  Southington  W.  Co.,  80  Conn.  646,  69  Atl.  1023. 

6  Long  V.  Athol,  196  Mas.s.  197,  82  N.  E.  665. 

6  Griffith  V.  Sebastian  County,  49  Ark.  24,  3  S.  W.  886. 

7  Harper  v.  Newburg,  159  N.  Y.  App.  Div.  695. 

8  Kingston  v.  L.  P.  &  J.  A.  Smith  Co.,  114  Fed.  294;  Ricker  v.  Chicago 
San.  DLst.  91  Fed.  833. 

9  Crocker  v.  U.  S.,  240  U.  S.  74,  60  L.  Ed.  533,  aff'g  49  Ct.  CI.  85. 

356 


CHAP.  XXXVII  ]       RESCISSION   OF    CONTRACT  [  §  246 

on  discovering  the  fraud,  affirm  the  contract  and  sue  for 
damages,  or  he  may  seek  rescission  by  a  repudiation  of  the 
contract,  tendering  back  what  he  has  received  under  it 
and  he  may  then  recover  what  he  has  parted  with  or  its 
equivalent  value.  ^  Mere  inadequacy  of  consideration, 
however,  is  not  regarded  even  in  equity  as  a  sufficient 
ground  for  rescission.- 

§  246.  What  Default  Authorizes  Rescission. 

Where  a  default  in  performance  is  partial  and  is  such  as 
may  be  compensated  in  damages,  the  contract  is  not 
ended.3  A  slight  or  casual  breach  will  not  justify  rescis- 
sion. The  breach  must  be  substantial  and  go  to  the  very 
foundation  of  the  contract  and  be  such  as  to  defeat  its 
very  objects  before  it  will  justify  rescission.^  Where  the 
contract  specifies  the  time  within  which  it  must  be  com- 
pleted and  it  is  not  performed  within  the  time  limited,  or 
within  a  reasonable  time,  if  there  be  no  specific  provision, 
such  failure  to  complete  will  warrant  a  rescission  of  the 
contract.^  So  also  a  failure  to  properly  perform  the  con- 
tract, if  not  contributed  to  by  the  pubhc  body  will  justify 
the  latter  in  terminating  the  contract.^  Where  wrongful 
acts  of  the  pubUc  body  or  its  officers  bring  about  the  de- 
fault,  of  course,   the  right  of  rescission  does  not  exist.' 

1  New  London  City  Bd.  v.  Robbins,  82  Conn.  623,  74  Atl.  938. 
2Quigley  v.  Sumner   County  Commr's,  24   Kan.  293;  Stewart  v.  State, 
2  Harr.  &  G.  (Md.)  114. 

5  Roettinger  v.  U.  S.,  26  Ct.  CI.  391;  Amsterdam  v.  Sullivan,  11  App.  Div. 
472,  162  N.  Y.  594,  57  N.  E.  1123. 

4  Lewman  v.  U.  S.,  41  Ct.  CI.  470. 

6  Weeks  v.  U.  S.,  45  Ct.  CI.  409;  Clark  v.  U.  S.,  3  Ct.  CI.  451. 

8  National  Contr.  Co.  v.  Comm,  183  Mass.  89,  66  N.  E.  639;  Richman  v. 
New  York,  89  Misc.  213;  Portland  v.  Baker,  8  Oregon,  356;  Milliken  v.  Callahan 
Co.,  69  Tex.  205,  6  S.  W.  681;  Watson  v.  DeWitt  Co.,  19  Tex.  C.  A.  150,  46 
S.  W.  1061;  Amsterdam  v.  Sullivan,  supra. 

^  King  V.  U.  S.,  37  Ct.  CI.  428;  Roberts  v.  Bury  Imp.  Comm'rs.,  L.  R.  5  C.  P. 
310. 

357 


§  246  ]  RESCISSION  [  PART  IV 

And  in  like  manner  the  contractor  may  not  himself  termi- 
nate or  abandon  the  contract  except  there  be  some  wrong- 
ful act  or  default  by  the  pubHc  body.^  He,  however,  has 
the  right  of  rescission  if  the  public  body  fails  or  refuses  to 
fulfill  its  own  contract  obligations  and  to  perform  those 
acts  which  it  is  their  duty  to  perform  and  which  are  condi- 
tions precedent  to  performance  by  the  contractor  or  which 
prevent  him  from  proceeding  with  performance.  ^  If  the 
public  body  defaults  in  furnishing  necessary  material 
which  it  is  bound  to  furnish  under  the  contract,  the  con- 
tractor is  justified  in  treating  the  contract  as  terminated.^ 
Where,  accordingly,  a  contractor  breaches  his  contract  with 
a  city  for  the  reduction  of  garbage  by  refusing  to  receive 
further  garbage,  the  liability  of  the  contractor  and  his 
sureties  accrues  at  once,  since  such  refusal  under  a  con- 
tract w^hich  required  him  to  take  all  the  garbage  was  the 
breach  of  a  dependent  covenant  which  entitled  the  public 
body  to  treat  the  entire  contract  as  broken  and  to  recover 
immediately  the  damages  for  a  total  breach.'' 

If  the  public  body  fails  to  furnish  the  necessary  dumps 
under  a  garbage  contract,  which  from  its  terms  was  entire, 
this  gives  the  contractor  the  right  to  terminate  and  rescind 
the  entire  contract.^  Where  a  contract  to  excavate  a  por- 
tion of  a  drainage  canal  provides  for  forfeiture  in  case  the 
contractor  becomes  in  default  in  the  progress  of  the  work, 
such  provision  will  be  enforced  since  the  inconvenience  to 

1  Chicago  San.  Dist.  v.  Ricker,  91  Fed.  833;  Lynip  v.  Alturas  Sch.  Dist., 
24  Cal.  App.  426,  141  Pac.  835;  Becker  v.  Philadelphia,  5  Pa.  C.  C.  97,  16  Atl. 
625. 

2  Clark  V.  N.  Y.,  3  Barb.  288;  Jungdorf  v.  Little  Rice,  156  Wis.  466,  145 
N.  W.  1092. 

3  McConnell  v.  Corona  City  W.  Co.,  14fl  Cal.  60,  85  Pac.  929,  8  L.  R.  A. 
N.  s.  1171;  Clarke  Cont.  Co.  v.  New  York,  229  N.  Y.  413,  128  N.  E.  241; 
Mahon  v.  Columbus,  58  Miss.  310,  38  Am.  Rep.  327. 

*  Bridgeport  v.  ^tna  Indem.  Co.,  91  Conn.  197,  99  Atl.  566. 
'  Clarke  Con.  Co.  v.  City,  supra. 

358 


CHAP.  XXXVII  ]       RESCISSION  OF   CONTRACT  [  §  247 

the  public  from  the  failure  to  complete  cannot  be  measured 
in  money  loss.^ 

§  247.  Waiver  of  Right  to  Rescission. 

The  right  to  rescission  may  be  waived  by  the  party  who 
is  entitled  to  it  by  his  failure  to  avail  himself  promptly  of 
such  right  ^  or  by  words  or  conduct  which  show  an  inten- 
tion not  to  exercise  it.  Such  party  cannot  stand  by  and 
permit  the  adverse  party  to  change  his  position  or  give  up 
substantial  rights  upon  the  theory  that  the  contract  is  still 
in  force  and  then  afterwards  claim  the  contract  is  termi- 
nated. So  he  may  not  bring  an  action  to  enforce  the  con- 
tract after  knowledge  of  his  right  to  rescission,  for  this  is  an 
affirmance  of  the  contract  which  will  bar  later  rescission.^ 
In  like  manner  acts  which  indicate  a  ratification  of  a 
voidable  contract  will  prevent  a  later  rescission.'^ 

Even  the  reserved  right  under  a  contract  to  annul  it  may 
be  waived.^  Where  the  public  body  accepts  work  in  an 
incomplete  condition  and  uses  it,  the  right  to  rescind  the 
contract  for  failure  to  complete  the  work  is  thereby 
waived.^  Where  the  right  to  supervise  and  inspect  the 
work  as  it  progresses  is  given  by  contract  to  the  public 
body,  with  the  power  to  approve  or  reject  the  material  or 
work,  after  the  building  has  been  completed  and  the  public 
body  has  the  use  of  it,  it  cannot  rescind  the  contract  and 
refuse  to  pay  the  compensation  on  the  ground  of  defects  in 
the  material  or  workmanship  which  was  approved,  as  the 
work   was   done   by   its   representative.^     And    after   the 

1  Harley  v.  San.  Dist.,  226  111.  213,  80  N.  E.  771. 

2  Bader  v.  New  York,  51  Misc.  358. 

3  People  V.  Stephens,  71  N.  Y.  527. 

*  Ferrari  v.  Escambia  County,  24  Fla.  390,  5  So.  1. 

6  Taylor  v.  New  York,  83  N.  Y.  625. 

8  Packwaukee  v.  Amer.  B.  Co.,  183  Fed.  359;  Florence  Gas,  etc.,  Co.  v. 
Hanby,  101  Ala.  15,  13  So.  343. 

7  Packwaukee  v.  Amer.  B.  Co.,  183  Fed.  359. 

359 


§  247  ]  RESCISSION  [  PART  IV 

ground  for  termination  exists  if  the  public  body  fails  to 
terminate  it  expressly  but  on  the  other  hand  acquiesces 
in  the  continuance  of  the  work  it  waives  the  right  to 
rescind.^  The  waiver  of  time  limit  fixed  by  the  contract 
is  a  waiver  of  the  right  of  forfeiture,  but  the  public  body 
may  grant  or  refuse  to  grant  an  extension  of  time,  irrespec- 
tive of  damages  resulting  therefrom.  ^  The  right  of  a  con- 
tractor who  agreed  to  dress  building  stone  delivered  to 
him  by  the  other  party  to  the  contract,  to  rescind  it  on 
account  of  delay  in  the  delivery  of  the  stone  was  lost, 
where  he  failed  to  act  promptly,  but  on  the  contrary  re- 
ceived and  dressed  a  large  quantity  of  the  stone  after  ship- 
ments had  been  resumed.^  If  a  contractor  fails  to  proceed 
with  the  speed  required  to  finish  the  work  within  the  time 
limited  imder  the  contract  and  the  public  body  acquiesces 
in  the  continuance  of  the  work  thereafter,  there  is  a  waiver 
of  the  right  to  terminate  the  contract.* 

§  248.  Restoring  Status  Quo. 

When  the  parties  cannot  be  placed  in  statu  quo  the 
contract  will  be  rescinded  in  equity  only  where  the  clearest 
equities  demand  it.^  Both  at  law  and  in  equity  the  general 
rule  is  that  the  party  who  rescinds  a  contract  must  place 
the  other  party  in  status  quo  ante.^  Where  accordingly 
one  party  has  received  and  retained  the  benefits  of  sub- 
stantial partial  performance  of  the  contract  by  the  other 
party  who  has  failed  to  completely  fulfill  his  covenants,  the 
first  party  cannot  retain  the  benefit  and  repudiate   the 

»  Rosser  v.  U.  S.,  46  Ct.  CI.  192;  Garland  v.  New  Orleans,  13  La.  Ann.  43. 
2  Rosser  v.  U.  S.,  supra. 

« Graham  v.  U.  S.,  188  Fed.  651,  aff'd  231  U.  S.  474,  58  L.  Ed.  319. 
^  Foster  v.  Worthington,  58  Vt.  65,  4  Atl.  565. 

'  U.  S.  V.  Norris,  222  Fed.  14;  Harper  v.  Newburgh,  159  N.  Y.  App.  Div. 
695. 

•  Ghance  v.  Bd.  of  Gomm'rs  Glay  Gounty,  5  Blackf .  441,  35  Am.  Dec.  131. 

360 


CHAP.  XXXVII  ]       RESCISSION   OF   CONTRACT  [  §  248 

burdens,  but  is  bound  to  perform  his  part,  and  his  remedy 
for  the  breach  is  Hmited  to  compensation  in  damages.^ 
But  the  rule  that  neither  party  to  a  transaction  will  be 
allowed  to  take  advantage  of  its  invalidity  while  retaining 
the  benefits  applies  only  to  voidable  contracts  and  not  to  a 
transaction  which  is  absolutely  void.^  And  it  is  the  general 
rule  that  one  seeking  to  rescind  for  mistake  or  fraud  must 
restore  the  status  quo  and  rescission  can  only  be  had  where 
the  status  quo  can  be  restored.  But  there  are  some  excep- 
tions to  this  rule,  in  so  far  as  it  applies  to  mistake  ^  and, 
apparently  against  the  current  of  authority,  there  are  some 
exceptions  Ukewise  in  the  case  of  fraud,*  under  which  it  is 
determined  the  party  suing  to  rescind  a  fraudulent  con- 
tract need  not  offer  to  return  what  has  been  received  under 
the  contract.^  But  the  prevaiUng  rule  is  otherwise,^  for  a 
man  does  not  become  an  outlaw  because  he  has  committed 
a  fraud  and  while  he  may  not  be  able  to  take  advantage 
of  his  own  fraud  and  use  it  as  a  ground  to  rescind  the  con- 
tract, where  the  other  who  has  the  right  does  rescind,  the 
courts  endeavor  to  do  substantial  justice  by  requiring  him 
to  do  what  equitably  he  should  and  restore  or  offer  to 
restore  what  has  been  received  under  the  contract  as  a  con- 
dition of  rescission. 

A  public  body  is,  however,  sufficiently  restored  to  status 
quo  upon  a  cancellation  of  the  contract  because  it  induced 
a  contractor  by  mutual  mistake  as  to  the  amount  of  work 

1  Idem. 

2  Independent  Schl.  Dist.  v.  Collins,  15  Idaho,  535,  98  Pac.  857,  128  Am.  St, 
R.  76;  Bartlett  v.  Lowell,  201  Mass.  151,  87  N.  E.  195. 

'  U.  S.  V.  Morris,  supra;  Harper  v.  Newburgh,  supra. 

*  Continental  Securities  Co.  v.  Belmont,  150  N.  Y.  App.  Div.  298,  206  N.  Y. 
7,  99  N.  E.  138,  51  L.  R.  A.  n.  s.  112. 

*  Idem. 

«  Stotts  V.  Fairfield,  163  Iowa,  726,  145  N.  W.  61;  Northampton  v.  Smith  11 
Mete.  390. 

361 


§  248  ]  RESCISSION  [  PART  IV 

to  be  done,  to  enter  into  the  contract,  where  it  is  required 
to  pay  merely  the  value  of  work  then  done.^ 

§  249.  Effect  of  Rescission. 

Rescission  wholly  terminates  a  contract  ^  and  no  suit 
thereafter  may  be  maintained  to  enforce  it  or  for  damages 
for  the  breach  of  the  contract  since  it  is  ended. ^  Some- 
times in  the  giving  of  notice  to  rescind  terms  are  used,  the 
effect  of  which  would  be  to  put  an  end  to  the  contract  and 
all  rights  under  it,  when  such  is  very  far  from  the  real  in- 
tention of  the  party  electing  to  rescind  and  who  uses  such 
language  to  give  expression  to  his  purpose.  But  the  mere 
use  of  words  such  as  ''rescind"  and  ''cancel"  which 
literally  and  strictly  construed  would  effect  a  complete  end 
and  destruction  of  the  contract  will  not  control  the  courts 
where  the  real  intention  of  the  party  rescinding  is  to  be 
released  from  further  obligation  to  comply  with  the  terms 
because  of  the  default  of  the  other  party,  and  to  hold  such 
party  to  the  payment  of  damages.  Courts  will  consider 
not  only  the  language,  but  all  the  circumstances  including 
the  effect  of  a  complete  rescission,  and  as  to  whether  the 
innocent  party  intended  such  a  result  in  reaching  a  conclu- 
sion as  to  the  proper  construction  of  such  language;  and 
words  will  not  be  permitted  to  prevail  over  intent.*  Such 
words  as  "cancel"  or  "annul,"  if  ill  chosen,  will  be  taken 
to  mean  a  refusal  to  perform  further  because  of  the  default 
of  the  other  party  and  not  to  rescind  or  avoid. '^  If  their 
real  effect  was  given  to  them,  as  used  in  the  notice  of 
refusal  to  be  obligated  by  its  terms  because  of  the  other 

1  Long  V.  Athol,  196  Mass.  497,  82  N.  E.  665. 

2  Hayes  v.  Nashville,  80  Fed.  641. 

3  East  St.  Louis  G.  Co.  v.  E.  St.  Louis,  57  III.  App.  411;  Newport  v.  Phillips, 
19  Ky.  L.  R.  352,  40  S.  W.  378. 

*  Hayes  v.  Nashville,  supra. 

'  U.  S.  V.  O'Brien,  220  U.  S.  321,  55  L.  Ed.  481,  aff'g  163  Fed.  1022. 

362 


CHAP.  XXXVII  ]       RESCISSION  OF  CONTRACT  [  §  249 

party's  default  and  the  contract  was  made  naught,  all 
rights  under  the  contract  would  be  ended,  whereas  the 
contract  provides  in  terms  that  rights  shall  arise  on  annul- 
ment, which,  but  for  this  provision  in  the  contract  the 
pubhc  body  annuling  would  not  have.^  A  contract  may  be 
abandoned  but  kept  aHve  as  an  enforceable  obligation  to 
which  the  party  abandoning  may  still  look  for  the  purpose 
of  determining  the  compensation  he  may  be  entitled  to  by 
virtue  of  its  terms  for  the  very  breach  which  gave  him 
such  right  of  abandonment.- 

The  implied  obligation  to  restore  the  status  quo  survives 
rescission  and  may  be  enforced  after  rescission  has  oc- 
curred.^ So  also  as  to  the  right  to  receive  payment  of  money 
due  pursuant  to  the  terms  of  a  contract  which  was  earned 
prior  to  its  disaffirmance.''  The  agreement  to  terminate  a 
contract  does  not  imply  a  surrender  of  all  claims  for  its 
breach  up  to  that  time.^  When  a  contract  is  rescinded  and 
the  work  or  supplies  are  used  by  the  public  body  and  it  re- 
ceives the  benefits  of  these,  it  is  liable  on  quantum  meruit.® 
Where  a  contract  is  avoided  for  fraud  and  the  public  body 
retains  the  supplies  furnished  under  the  contract  a  recovery 
of  their  value  may  be  had.^  Where  the  pubhc  body  continues 
to  receive  the  benefits  of  the  contract,  even  after  rescission, 
it  becomes  hable  on  implied  contract  to  pay  for  the  same.^ 

A  public  body  may  abandon  or  terminate  a  contract  and 

^  U.  S.  V.  O'Brien,  supra. 

*  Hayes  v.  Nashville,  supra. 

3  Crocker  v.  V.  S.,  240  U.  S.  74. 

^  People  V.  Republic  Sav.  L.  Ass'n,  97  N.  Y.  App.  Div.  31. 

*  U.  S.  V.  O'Brien,  supra;  Hayes  v.  Nashville,  supra. 

8  Greenlee  County  v.  Cotey,  17  Ariz.  542,  155  Pac.  302;  Watson  v.  DeWitt 
County,  19  Tex.  Civ.  App.  150,  46  S.  W.  1061;  Crocker  v.  U.  S.  240  U.  S.,  74, 
60  L.  Ed.  533,  aff'g  49  Ct.  CI.  85;  Long  v.  Athol,  196  Mass.  497,  82  N.  E.  665. 

^  Crocker  v.  U.  S.,  supra. 

8  State  V.  Great  Falls,  19  Mont.  518,  49  Pac.  15;  U.  S.  Water  Works  v.  Du- 
Bois,  176  Pa.  St.  439,  35  Atl.  251.    See  Roettinger  v.  U.  S.,  26  Ct.  CI.  391. 

363 


§  249  ]  RESCISSION  [  PART  IV 

prevent  the  further  performance  of  it  by  the  contractor, 
upon  the  usual  terms  which  the  law  imposes  in  such  cases, 
namely:  the  recovery  of  compensatory  damages,^  if  any 
have  arisen.  In  case  it  turns  out  that  the  public  body 
have  wrongfully  prevented  the  contractor  from  performing, 
it  is  Uable  in  damages  for  breach  of  contract. ^  Where  a 
contractor  voluntarily  substitutes  one  contract  for  another 
he  relinquishes  any  damage  incurred  under  the  old  contract.' 

A  contractor  has  no  action  for  damages  by  reason  of  the 
exercise  by  the  public  body  of  its  reserved  right  to  annul 
the  contract  when  not  satisfied  with  the  work.*  While  as 
stated  above,  rescission  ends  a  contract  and  all  rights  under 
it,  an  attempted  rescission  which  proves  ineffective  does 
not  impair  such  right  of  action.^ 

Where  a  contract  provides  that  out  of  installment  pay- 
ments a  certain  amount  shall  be  retained  until  the  contract 
is  completed  and  for  the  forfeiture  of  such  amount,  in  case 
of  annulment  of  the  contract  for  the  contractor's  failure  to 
duly  and  properly  perform,  the  right  to  retain  such  money 
must  be  clearly  shown  and  brought  within  the  terms  of  the 
contract,  as  forfeitures  are  not  encouraged.^  Nevertheless 
such  provisions  are  valid,  and  when  the  forfeiture  comes 
clearly  within  the  terms  of  the  contract  the  provision  of  the 
contract  will  be  upheld  and  enforced.^ 

1  Damon  v.  Granby,  2  Pick.  345;  Lord  v.  Thomas,  64  N.  Y.  107;  Parr  v. 
Greenbush,  112  N.  Y.  246,  19  N.  E.  684. 

2  Wakefield  Cons.  Co.  v.  N.  Y.,  157  N.  Y.  App.  Div.  535,  213  N.  Y.  633, 
107  N.  E.  1087;  Smith  Cont.  Co.  v.  N.  Y.,  167  N.  Y.  App.  Div.  253;  Amster- 
dam V.  SulHvan,  11  N.  Y.  App.  Div.  472,  162  N.  Y.  594,  57  N.  E.  1123;  Wella 
V.  We.st  Bay  Bd.  of  Educ,  78  Mich.  260,  44  N.  W.  267. 

3  Braden  v.  U.  S.,  16  Ct.  CI.  389. 

*  Harder  v.  Marion  County,  97  Ind.  455. 

^  GreenviUe  v.  Greenville  W.  Wks.  Co.,  125  Ala.  625,  27  So.  764.  See  Nat. 
Cont.  Co.  V.  Hudson  R.  P.  Co.,  192  N.  Y.  209,  84  N.  E.  965. 

«Harley  v.  Chicago  San.  Dist.,  226  111.  213,  80  N.  E.  771;  Bietry  v.  New 
Orleans,  22  La.  Ann.  149;  Henegan  v.  U.  S.,  17  Ct.  CI.  273. 

'  Harley  v.  Chicago  San.  Dist.,  suj/ra;  Williams  v.  U.  S.,  28  Ct.  CI.  518. 

364 


PART  V.   PERFORMANCE  AND  BREACH 
CHAPTER  XXXVIII 

PERFORMANCE — TO  SATISFACTION  OF  ADVERSE  PARTY  OR 
THIRD  PERSON 

§  250.  Performance  to  Satisfaction  of  Other  Party  or 
Engineer. 
In  most  public  contracts  it  is  provided  that  the  con- 
tractor shall  complete  the  entire  work  in  a  thoroughly- 
skillful  and  workmanhke  manner,  and  satisfactory  to  the 
public  body  and  their  engineer.  By  reserving  to  the  public 
body  a  general  direction  and  superintendence  the  con- 
tractor agrees  to  conform  to  its  reasonable  directions,  act- 
ing with  an  honest  and  just  regard  to  its  interest.  But  the 
pubUc  body  and  its  engineer  may  not  act  arbitrarily  or 
capriciously  but  must  act  reasonably  and  in  accordance 
with  fairness  and  good  faith,  ^  and  where  the  pubHc  body 
ought  in  reason  to  be  satisfied  with  the  work,  the  courts 
will  say  that  it  is  satisfied  with  it.^  In  some  jurisdictions 
the  rule  is  announced  that  where  the  work  or  materials  are 
to  be  furnished  to  the  satisfaction  of  a  third  party  desig- 
nated as  arbiter,  it  is  not  a  question  of  the  good  faith 
of  the  dissatisfaction  claimed  but  the  party  hurt  must 
show  that  the  expression  of  dissatisfaction  was  the  result 

1  Chapman  v.  Lowell,  58  Mass.  378;  Gearty  v.  Mayor,  171  N.  Y.  61,  63 
N.  E.  804;  Sidney  School  Furn.  Co.  v.  Warsaw  Sch.  Dist.,  130  Pa.  St.  76,  18 
Atl.  604;  ParUn  &  Orendorff  Co.  v.  Greenville,  127  Fed.  55;  G.  A.  Webb  Co. 
V.  Trustees  Morgantown  Sch.,  143  N.  C.  299,  55  S.  E.  719. 

*  Brooklyn  v.  Brooklyn  Cty.  R.  Co.,  47  N.  Y.  475;  Gearty  v.  Mayor,  171 
N.  Y.  61,  63  N.  E.  804. 

365 


§  250  ]  PERFORMANCE   AND   BREACH  [ PART  V 

of  fraudulent  collusion  between  the  arbiter  and  the  public 
body.^    And  again  it  is  declared  that,  where  appUances  or 
apparatus  are  purchased,  and  installed  upon  the  under- 
standing  that  they  are  not  to  be  accepted  unless  they 
operate  satisfactorily  in  the  judgment  of  the  public  body 
upon  tests,  the  latter  is  not  obhged  to  accept  and  pay  for 
them  unless  they  are  satisfactory  when  tested.     In  such 
cases  the  question  of  reasonableness  or  the  good  faith  of 
the  public  body  is  not  in  concern.-     When  work  is  to  be 
performed  to  the  satisfaction  of  an  engmeer  who  is  named 
as  arbiter  and  he  announces  his  decision,  it  becomes  binding 
upon  the  public  body.^    There  are  two  general  classifica- 
tions which  may  be  made  of  contracts  to  be  performed  to 
the  satisfaction  of  a  public  body.     The  first  is  where  it 
absolutely  reserves  to  itself  the  right  of  decision  without 
being  required  to  disclose  the  reasons  thereof,  and  the  right 
to  examine  into  the  decision  by  the  other  party  or  by  the 
courts  is  excluded.     Since  this  is  a  competent  matter  for 
parties  to  insert  in  a  contract,  when  it  exists  it  becomes 
the  law  of  the  contract  and  binds  the  parties.''     The  other 
classification   is  where   the  pubhc   body  is   held   to   have 
undertaken  to  act  reasonably  and  fairly  and  to  decide  the 
question  of  satisfaction  upon  reasonable,  just  and  sensible 
grounds.    The  decision  in  this  latter  class  is  open  to  judi- 
cial revision,  and  where  the  public  body  ought  reasonably 
to  be  satisfied  it  will  be  held  to  be  satisfied.^     When  a 
garbage  furnace  meets  the  test  provided  and  compUes  with 
the  specifications,  a  public  body  cannot  defeat  the  con- 

1  Hostetter  v.  Pittsburgh,  107  Pa.  St.  419. 

2  U.  S.  Elec.  F.  Alarm  Co.  v.  Big  Rapids,  78  Mich.  67,  43  N.  W.  1030; 
Manning  v.  Sch.  Dis.  Ft.  Atkinson,  124  Wis.  84,  102  N.  W.  356. 

'  Omaha  v.  Hammond,  94  U.  S.  98,  24  L.  Ed.  70. 

*  Parlin  &  Orendorff  Co.  v.  Greenville,  swpra;  U.  S.  Elec.  F.  Alarm  Co.  v. 
Big  Rapids,  supr'^i  Manning  v.  Sch.  Dist.  Ft.  Atkinson,  swpra. 
'  Parlin  &  Orendorff  Co.  v.  Greenville,  supro- 

366 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  251 

tractor's  recovery  by  capriciously  and  unreasonably  refus- 
ing to  express  their  satisfaction  with  the  work.^ 

§  251.  Decision  of  Engineer — Duty  of  Engineer. 

Wherever  parties  agree  upon  some  designated  person 
whose  judgment  is  to  determine  questions  arising  under  a 
pubUc  contract  and  they  confide  to  his  judgment,  skill  and 
decision  the  determination  as  to  the  character,  amount  and 
value  of  work  to  be  done,  and  as  to  its  completion,  they 
must  abide  by  the  judgment  and  decision  of  this  tribunal 
of  their  own  selection  or  impeach  it  on  recognized  grounds. 
But  the  very  extent  of  his  power  and  the  conclusive 
character  of  his  decision  implies  the  corresponding  duty 
that  his  adjudication  shall  be  made  not  capriciously  or 
fraudulently  but  reasonably  and  with  due  regard  to  the 
rights  of  both  contracting  parties.^  He  must  not  be 
affected  by  outside  influence  or  suggestion.'  But  in  reach- 
ing this  personal  determination  he  may  rely  upon  informa- 
tion obtained  from  other  persons,  where  the  contract  does 
not  require  him  personally  to  see  that  the  work  is  done  or 
the  materials  used.^  He  must  act  honestly  and  in  good 
faith.  He  may  not  act  whimsically  or  arbitrarily.^  Who 
the  designated  person  shall  be  is  in  the  keeping  of  the  parties 
and  there  is  no  objection  to  the  parties  choosing,  from  among 
suitable  persons  upon  whose  judgment  and  certified  estimates 
payments  shall  be  made,  one  who  happens  to  be  a  public 
officer,  since  when  acting  as  arbiter  he  acts  individually.^ 

1  Idem. 

2  Ripley  v.  U.  S.,  223  U.  S.  695, 56  L.  Ed.  614;  Baltimore  v.  Ault,  126  Md, 
402,  94  Atl.  1044. 

^  Baltimore  v.  Ault,  supra. 

*  State  V.  Blanchard  Cons.  Co.,  91  Kan.  74,  136  Pac.  905;  Jones  v.  New 
York,  60  N.  Y.  App.  Div.  161,  174  N.  Y.  517. 

5  Baltimore  v.  Ault,  supra;  Evans  v.  Middlesex  County,  209  Mass.  474,  95 
N.  E.  897;  Lewman  v.  U.  S.,  41  Ct.  CI.  470. 

« State  V.  Blanchard  Cons.  Co.,  supra. 

367 


§  252  ]  PERFORMANCE   AND   BREACH  [  PART  V 

§  252.  Validity    of    Stipulation   Requiring    Certificate    of 
Engineer. 
A  contractor  may  lawfully  consent  that   provision  be 
inserted  in  his  contract  for  public  work  that  material  or 
work  shall  not  be  paid  for  until  approved  by  some  officer, 
engineer  or  architect.     Stipulations  providing  for  such  a 
person   as   arbiter,    to   decide  all   disputes  arising   during 
performance  of  the  work,  or  to  issue  progress  certificates 
showing  his  approval  of  the  performance  of  the  work,  and 
of  its  final  completion,  are  vaHd  and  binding.^    So  long  as 
the  person  nominated  acts  in  good  faith  and  not  arbitrarily 
and  there  is  no  fraud  or  palpable  error  in  his  decisions  or 
certificates  they  are  conclusive.-    The  powers  conferred  by 
these  stipulations  are,  however,  in  derogation  of  the  com- 
mon-law right  of  trial  by  jury  and  should  not  be  unduly 
extended.     Parties  are  not  permitted  to  oust  the  courts  of 
jurisdiction  by  the  scope  and  extent  of  the  stipulation.^ 
But,   when   general  language  confers  upon   the  engineers 
power  to  determine  all  the  questions  that  may  arise  under 
the  contract,  which  might  prove  objectionable,  it  will  be 
fimited  by  the  more  specific  language  which  refers  to  them 
the  decision  as  to  the  amount  or  the  quantity  of  the  work 
which  is  to  be  paid  for,  and  all  questions  relative  to  the 
fulfillment  of  the  contract  by  the  contractor."    Where  the 
power  conferred  limits  the  decision  of  the  engineer  to  disa- 
greements or  differences  arising  as  to  the  true  meaning  of 
the  drawings  or  specifications,  the  engineer  has  no  power 
to  determine  a  claim  of  the  public  body  resulting  from  the 

1  Ruch  V.  York  City,  233  Pa.  St.  36,  81  Atl.  891;  Clark  &  Sons  Co.  v.  Pitts- 
burgh, 217  Pa.  St.  46,  66  Atl.  154. 

2  Ruch  V.  York  City,  suj/ra. 

3  Seward  v.  Rochester,  109  N.  Y.  164,  168,  16  N.  E.  348;  Ruch  v.  York 
City,  233  Pa.  St.  36,  81  Atl.  891;  Fulton  County  v.  Gibson,  158  Ind.  471,  63 
N.  E.  982. 

*  Nat.  Cont.  Co.  v.  Hudson  River  W.  P.  Co.,  170  N.  Y.  439,  63  N.  E.  450. 

368 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  254 

contractor's  delay.  ^  The  provision  that  such  certificates 
must  be  obtained  before  suit  and  as  a  condition  of  suit  will 
not  invalidate  such  stipulations.^ 

§  253.  Powers  of — Certificate  of  Engineer  not  Extended 
Beyond  Submission. 

The  provisions  of  public  contracts  requiring  submission 
of  disputes  to  an  arbiter  appointed  thereby  is  in  derogation 
of  the  right  to  trial  by  jury,  which  will  not  be  taken  away 
from  litigants  by  implication.  In  order  to  oust  the  juris- 
diction of  the  courts  it  must  clearly  appear  that  the  subject- 
matter  was  within  the  intended  submission.^  An  agree- 
ment of  submission  will  not  be  extended  by  implication 
beyond  its  plain  words;  and  a  provision  therein  to  submit 
questions  that  may  arise  as  to  fulfillment  of  a  contract  will 
not  give  the  right  to  pass  on  a  claim  for  damages  for  non- 
fulfillment.^ While  such  a  submission  may  include  the 
power  to  determine  the  right  of  a  party  to  liquidated 
damages  under  the  contract,  this  power  will  not  be  implied.^ 
Accordingly,  any  decision  of  the  engineer  as  to  matters  not 
properly  submissible  to  him  under  a  contract  will  not  be 
binding  upon  the  parties.^ 

§  254.  Approval  of  Engineer — Power  to  Modify  or  Alter 
Terms  of  Contract. 

An  engineer  or  architect  is  merely  the  special  agent  of 
the    pubhc    body    appointing    him,  and    unless    expressly 

1  Chandley  v.  Cambridge  Springs,  200  Pa.  St.  230,  49  Atl.  772. 

2  Nat.  Cont.  Co.  v.  Hudson  River  W.  P.  Co.,  supra;  Bray  v.  U.  S.,  46  Ct.  CI. 
132. 

3  Ruch  V.  York  City,  233  Pa.  St.  36, 81  Atl.  891;  ^tna  Indem.  Co.  v.  Waters, 
110  Md.  673,  73  Atl.  712. 

*  Ruch  V.  York  City,  supra;  Somerset  Borough  v.  Ott,  207  Pa.  St.  539,  56 
Atl.   1079. 

^  Ruch  V.  York  City,  supra. 
^  Idem. 

369 


§  254  ]  PERFOKMANCE   AND   BREACH  [  PART  V 

authorized  to  do  so  by  the  terms  of  the  contract  possesses 
no  power  to  alter,  change  or  modify  the  contract  between 
the  parties.  If  he  does  and  issues  a  certificate  after  such 
change,  stating  that  the  work  has  been  completed  according 
to  the  contract,  it  will  not  bind  the  parties.^ 

Where  a  public  contract  provides  that  the  work  shall 
proceed  under  the  direction  of  a  certain  officer,  engineer 
or  architect,  this  will  not  authorize  material  or  essential 
changes  or  modifications  of  the  terms  of  the  contract.^ 
This  power  is  limited  to  such  changes  as  are  contemplated 
by  the  parties  at  the  time  the  contract  was  made  and  he 
cannot  increase  or  diminish  the  quantities  of  work  to  be 
done  beyond  this  limit  or  substantially  or  radically  alter 
the  character  of  the  work  without  paying  the  reasonable 
value  of  changes  directed.^  Where  an  engineer  is  em- 
powered to  make  changes  in  details  of  a  contract  by  which 
a  given  result  is  to  be  accomplished,  he  has  no  power  to 
make  changes  which  alter  or  destroy  the  essential  identity 
of  the  thing  to  be  effected.''  The  engineers  in  charge  of  a 
reservoir  dam  construction  cannot  change  the  specifications 
of  the  work  by  increasing  it  in  particulars  by  one  hundred 
fifty-five  per  cent  to  five  hundred  per  cent  without  an  abro- 
gation of  the  original  contract  to  the  extent  of  such  changes.^ 

1  Williams  v.  Bd.  of  Garden  Bottom  L.  Dist.,  100  Ark.  166,  139  S.  W.  1136. 

=  Becker  v.  New  York,  176  N.  Y.  441,  68  N.  E.  855;  Bonesteel  v.  Mayor,  22 
N.  Y.  162;  McMaster  v.  State,  108  N.  Y.  542,  15  N.  E.  417;  Bond  v.  Newark, 
19  N.  J.  Eq.  376;  Ruch  v.  York  City,  233  Pa.  St.  36,  81  Atl.  891;  Williams 
V.  Bd.  of  Directors  Garden  B.  L.  Dist.,  100  Ark.  166,  139  S.  W.  1136. 

3  Hayden  v.  Astoria,  74  Oreg.  525,  145  Pac.  1072;  National  Gont.  Go.  v. 
Hudson  Riv.  P.  Go.,  192  N.  Y.  209,  84  N.  E.  965;  McMaster  v.  State,  supra; 
Gook  V.  Harms,  108  111.  151;  Smith  v.  Bd.  of  Educ,  76  W.  Va.  239,  85  S.  E. 
513;  Salt  Lake  Gity  v.  Smith,  104  Fed.  457;  Henderson  Bridge  Co.  v.  McGrath, 
134  U.  S.  260,  33  L.  Ed.  934. 

« Nat.  Gont.  Co.  v.  Hudson  Riv.  W.  P.  Co.,  192  N.  Y.  209,  84  N.  E.  965; 
McMaster  v.  State,  supra;  Dunning  v.  Orange  County,  139  N.  Y.  App.  Div. 
249,  204  N.  Y.  647,  97  N.  E.  1104;  County  of  Cook  v.  Harms,  108  111.  151,  159; 
Salt  Lake  City  v.  Smith,  supra. 

6  Hayden  v.  Astoria,  supra. 

370 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  255 

And  an  architect  has  no  power,  to  be  exercised  at  his 
pleasure,  to  make  such  material  alterations  and  changes  in 
drawings  as  he  might  think  proper.^  If  such  power  existed, 
drawings  and  specifications  would  be  useless  adjuncts  to 
a  contract.^  But  on  the  other  hand,  where  the  specifica- 
tions refer  to  a  building  instead  of  buildings  but  actually 
refer  to  rear  walls  in  the  plural,  a  contractor  will  be  re- 
quired to  underpin  the  walls  of  two  buildings  of  which  he 
knew  by  inspection,  since  this  ambiguity  gave  rise  to  a 
dispute  upon  which  the  decision  of  the  architect  was  final.^ 

§  255.  Decision  of  Engineer — Power  to  Require  Doing  of 
Work  Apparently  or  Doubtfully  Outside  Terms 
of  Contract. 
Where  an  engineer  or  other  officer  or  representative  of  a 
public  body  without  collusion  and  against  the  contractor's 
opposition  requires  the  latter  to  do  something  as  covered 
by  his  contract,  and  the  question  whether  this  requirement 
is  embraced  within  the  contract  is  fairly  debateable  and  its 
determination  is  surrounded  by  doubt,  the  contractor  may 
comply  with  the  demand  under  protest,  and  subsequently 
recover  damages,  even  if  it  turns  out  that  he  was  right  and 
the  thing  required  was  not  covered  by  the  contract."*  On 
the  other  hand,  if  the  thing  required  is  clearly  beyond  the 
limits  of  the  contract,  the  contractor  may  not  even  do  it 
under  protest  and  subsequently  recover  damages.^  In 
this  latter  case  the  reason  for  such  rule  is  that  the  engineer 

1  Smith  V.  Bd.  of  Education,  supra. 

2  Idem. 

»  MerriU-Ruckgaber  Co.  v.  U.  S.,  49  Ct.  CI.  533,  aff'd  241  U.  S.  387,  60  L.  Ed. 
1058. 

4  Borough  Const.  Co.  v.  New  York,  200  N.  Y.  149,  93  N.  E.  480;  Beckwith 
V.  New  York,  148  N.  Y.  App.  Div.  658,  210  N.  Y.  530,  103  N.  E.  1121;  Gearty 
V.  Mayor,  171  N.  Y.  61,  63  N.  E.  804;  Lentilhon  v.  New  York,  102  N.  Y.  App. 
Div.  548,  185  N.  Y.  549,  77  N.  E.  1190. 

5  Borough  Const.  Co.  v.  New  York,  supra;  Becker  v.  New  York,  176  N.  Y. 
441,  68  N.  E.  855. 

371 


§  255  ]  PERFORMANCE   AND    BREACH  [  PART  V 

would  be  making  a  new  contract  for  the  parties  which  he 
is  without  power  to  do.  This  can  be  done  only  in  the 
manner  prescribed  by  statute.^  In  the  latter  case  the 
contractor  must  refuse  to  proceed.  In  the  former  case 
he  may  refuse  to  proceed,  stop  work  as  ordered  by  the 
engineer,  stand  upon  his  contention  that  the  work  required 
to  be  done  or  to  be  done  over  again  is  either  outside  the 
contract  or  has  been  properly  done  already,  as  the  case 
may  be,  and  bring  his  action  to  recover  for  labor  and 
materials  performed  and  furnished  under  the  contract  and 
claim  his  prospective  profits.^  But  in  those  cases  where 
there  is  doubt  that  the  thing  required  to  be  done  is 
embraced  within  the  contract  the  contractor  is  not  com- 
pelled to  refuse  obedience  to  the  order  of  the  engineer  and 
incur  the  hazard  of  becoming  a  defaulter  upon  his  con- 
tract. He  may  do  the  work  under  protest  and  recover 
damages  for  the  breach  of  his  contract.  The  hazards  of 
an  incorrect  decision  cannot  fairly  be  placed  upon  the 
contractor.  But  he  must  protest  or  the  officer  or  engineer 
will  have  the  right  to  assume  that  the  contractor  acquies- 
ces in  his  decision  and  performs  the  work  under  the  contract. 
He  cannot  apparently  accept  the  decision  to  do  the  work,  and 
afterwards  attack  the  decision  as  incorrect  and  seek  to  re- 
cover for  it.^  Where,  however,  the  contractor  makes  his  pro- 
test under  the  claim  that  the  true  construction  of  the  con- 
tract does  not  require  him  to  do  the  work  he  may  recover  for 
the  work  done,"  or  for  damages  for  breach  of  the  contract.^ 

*  Becker  v.  New  York,  supra. 

2  Gearty  v.  Mayor,  sujyra;  Borough  Const.  Co.  v.  New  York,  supra;  Beck- 
with  V.  New  York,  supra;  Roehm  v.  Horst,  178  U.  S.  1,  44  L.  Ed.  953,  aff'g 
91  Fed.  345. 

»  Bowe  V.  U.  S.,  42  Fed.  761,  778. 

*  CaUahan  Const.  Co.  t;.  U.  S.,  47  Ct.  CI.  229;  Federal  Cont.  Co.  v.  Coal  Cr. 
D.  &  L.  Dist.,  166  111.  App.  369;  U.  S.  y.  Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 

'  Borough  Const.  Co.  v.  New  York,  supra;  Gearty  t;.  Mayor,  supra. 

372 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  257 

§  256.  Effect  of  Failure  of  Engineer  to  Notify  Contractor 
During  Progress  of  Work  that  Work  Does  not 
Comply  with  Contract. 
Where  a  contract  appoints  someone  qualified  to  judge 
the  work  and  its  progress,  and  charges  him  with  the  duty 
of  inspecting  the  work  and  reporting  upon  it  and  requires 
him  to  notify  the  contractor  if  any  of  the  work  or  materi- 
als fail  to  comply  with  the  plans  and  specifications  and 
such  person  inspects  the  work  and  allows  it  to  proceed 
and  fails  to  notify  the  contractor  during  its  progress  that 
the  work  does  not  comply  with  the  contract,  this  operates 
as  an  acceptance  of  the  work  and,  in  the  absence  of  a 
provision  in  the  contract  saving  the  public  body  against 
such  consequences,  is  conclusive.  One  appointed  to  ac- 
cept or  reject  work  must  do  so  when  the  work  is  being 
done.  He  may  not  allow  the  contractor  to  believe  that 
the  work  is  satisfactory  and  when  finished  reject  it.^ 

§  257.  Certificate  of  Engineer — Certificate  of  Performance 
— Condition  Precedent  to  Payment. 

Where  the  contract  provides  that  payment  is  not  to  be 
made  until  the  oflicer  appointed  by  the  contract  certifies 
that  the  work  has  been  performed  in  accordance  with  the 
contract,  the  procuring  of  such  certificate  is  a  condition 
precedent  to  payment,  and  where  such  officer  refuses  to 
issue  the  certificate  and  there  is  no  fraud,  or  such  gross 
mistake  as  to  imply  fraud  and  no  failure  to  exercise  an 
honest  judgment,  no  action  will  lie  for  the  compensation 
provided  by  the  contract.^ 

1  Danville  Bridge  Co.  v.  Pomroy,  15  Pa.  St.  151;  Pauly  Jail  Bldg.  &  Mfg. 
Co.  V.  Hemphill  County,  62  Fed.  698.  See  Lamborn  v.  Marshall,  133  Mich. 
250,  95  N.  W.  78.    See  §  261. 

2  Kihiberg  v.  U.  S.,  97  U.  S.  398,  24  L.  Ed.  1106,  aff'g  13  Ct.  CI.  148;  Sweeney 
V.  U.  S.,  109  U.  S.  618,  27  L.  Ed.  1053,  aff'g  15  Ct.  CI.  400;  Phelan  v.  Mayor, 
119  N.  Y.  86,  23  N.  E.  175;  O'Brien  v.  Mayor,  139  N.  Y.  543,  35  N.  E.  323. 

373 


§  258  ]  PERFORMANCE  AND   BREACH  [  PART  V 

§  258.  Certificate  of  Engineer,  Valuation  of  Extra  Work, 
Condition  Precedent  to  Payment. 

It  is  sometimes  provided  in  public  contracts  that 
the  prices  and  quantities  of  extra  work  shall  be  agreed 
upon  in  addition  to  the  provision  that  the  order  therefor 
shall  be  in  writing.  When  a  contract  so  provides  in  effect 
it  requires  a  valuation  of  the  extra  work  before  payment 
therefor  can  be  required,  and  the  decision  of  the  engineer 
upon  this  question  is  final  and  conclusive  when  given.  ^ 

§  259.  Certificate  of  Engineer — Condition  Precedent  to 
Suit. 
WTiere  a  final  certificate  of  the  proper  performance  of 
work  is  required  by  contract  to  be  obtained  from  an 
engineer  or  architect,  or  disputes  are  referred  to  him  by 
contract  stipulation  for  his  decision,  these  requirements 
are  binding  and  constitute  a  condition  precedent  to  the 
nmintenance  of  any  action  to  enforce  payment  from  the 
public  body.-  The  jurisdiction  of  the  engineer  is  limited, 
however,  by  the  terms  of  the  contract  and  relates  usually 
to  disputes  arising  during  the  performance  of  the  contract. 
Such  stipulations  will  not  be  extended  to  cover  questions 
arising  after  the  completion  of  the  contract.  Nor  will  it 
be  interpreted  to  deprive  the  parties  of  their  rights  to  a 
judicial  construction  of  the  contract,  involving  matters  of 
law,  or  relating  to  the  question  of  the  due  compensation 
to  which  he  was  legally  entitled  under  the  contract  or 

1  Kennedy  v.  U.  S.,  24  Ct.  CI.  122. 

2  Sweeney  v.  V.  S.,  109  U.  S.  618,  27  L.  Ed.  10.53,  aff's  15  Ct.  CI.  400;  Kihl- 
berg  V.  U.  S.,  97  U.  S.,  398, 24  L.  Ed.  1106,  aff'g  13  Ct.  CI.  148;  Barlow  v.  U.  S., 
35  Ct.  CI.  514,  184  U.  S.  123,  46  L.  Ed.  463;  Amer.  Bond.  &  T.  Co.  v.  Gibsonl 
Co.,  127  Fed.  671;  Brown  v.  Baton  Rouge,  109  La.  967,  34  So.  41;  Nations 
Cont.  Co.  V.  Comm.,  183  Mass.  89,  66  N.  E.  639;  Dinsmore  v.  Livingston 
County,  60  Mo.  241;  Montgomery  v.  N.  Y.  151  N.  Y.,  249,  45  N.  E.  550; 
Dwyer  v.  Bd.  of  Educ,  27  App.  Div.  87,  165  N.  Y.  613,  59  N.  E.  1122;  Phelan 
V.  Mayor,  119  N.  Y.  86,  23  N.  E.  175;  Hostetter  v.  Pittsburg,  107  Pa.  St.  419. 

374 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  260 

under  evidence  as  to  the  acts  of  the  parties  not  in  terms 
covered  by  the  contract.^  Where  the  contract  provision  is 
for  a  final  certificate  and  the  pubhc  body  acting  under 
other  provisions  exercises  its  right  to  stop  the  work  for 
delay  and  completes  the  work,  if  the  contractor  brings  suit 
for  a  balance  claimed  to  be  due  he  is  not  obliged  to  obtain 
the  certificate  of  the  engineer  as  a  condition  precedent 
thereto.^  Where  the  arbitration  clause  is  of  doubtful 
application  it  will  not  be  extended  to  a  dispute  between 
the  parties  as  to  whether  liquidated  damages  should  be 
paid  because  a  building  was  not  completed  on  the  date 
fixed  in  the  contract.^  Agreements  which  provide  for 
arbitration  of  matters  arising  during  the  course  of  the 
work  and  which  cannot  be  left  until  the  work  is  completed, 
must  be  upheld.  Even  though  the  terms  of  a  contract  are 
rigorous,  if  there  is  nothing  to  show  that  the  engineer 
acted  in  bad  faith,  it  must  be  presumed  that  he  acted  with 
appropriate  regard  to  his  duties  between  the  parties."^ 
If  the  action  is  not  upon  the  contract  but  for  breach  of  it, 
as  where  the  contractor  is  compelled  to  do  work  over 
which  was  properly  done  under  the  contract  and  sues  for 
his  damage,  a  certificate  is  not  necessary.^ 

§  260.  Appeal  from  Decision  of  Engineer. 

The  duty  to  appeal  to  a  chief  engineer  or  other  officer 
from  the  resident  engineer  or  engineer  in  charge  of  work, 
where  it  exists,  must  be  exercised.  But  such  duty  will  not 
be  unduly  extended  to  cover  matters  which  are  not  affected 

iGammino  v.  Dedham,  164  Fed.  593. 

2  Clark  &  Sons  Co.  v.  Pittsburgh,  154  Fed.  464,  164  Fed.  441. 

3  Maurer  v.  Sch.  Dist.,  186  Mich.  223,  152  N.  W.  999. 
*  Gearing  v.  U.  S.,  48  Ct.  CI.  12„ 

=  Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E.  804;  Borough  Cons.  Co.  t-.  New 
York,  200  N.  Y.  149,  93  N.  E.  480;  Faber  v.  New  York,  222  N.  Y.  255,  11& 
N.  E.  609;  Contra,  Amer.  Bond  Co.  v.  U.  S.,  127  Fed.  671. 

375 


§  260  ]  PERFORMANCE   AND   BREACH  [  PART  V 

by  such  provision  of  a  contract.^  The  basic  principle  in 
all  contract  questions  relating  to  the  power  of  decision  by 
an  engineer  is  that  he  possesses  no  power  and  has  no 
jurisdiction  over  matters  not  expressly  committed  to  him 
bj'  the  contract. 

§261.  Decision  or  Certificate  of  Engineer — Refusal  to 
Make. 
When  a  contract  makes  it  a  condition  precedent  to  a 
contractor's  right  to  require  payment  that  the  work  should 
be  fully  completed  as  set  out  in  the  contract,  and  such 
completion  certified  by  a  designated  officer,  if  in  contem- 
plation of  the  contract  it  ought  to  be  given,  it  is  un- 
reasonable to  refuse  it.-  The  engineer  must  issue  the 
certificate  when,  in  the  contemplation  of  the  contract  the 
state  of  things  exists,  beyond  dispute,  to  which  he  is  to 
certify,  namely,  the  due  completion  of  the  contract.  A 
contractor  is  accordingly  excused  from  obtaining  the 
certificate  when  the  refusal  to  issue  it  is  unreasonable  or 
it  is  in  bad  faith  refused.  The  refusal  to  accept  the  work 
cannot  be  arbitrary,  unreasonable  or  unjust  if  it  ought  to 
be  accepted.^  The  substantial  performance  of  a  contract 
entitles  a  contractor  to  recovery.  So  the  question  of 
reasonableness  of  a  refusal  to  certify  and  approve  work 
substantially  performed  is  for  a  jury  to  decide.''  But  the 
decision  of  the  engineer  when  honestly  made  is  binding. 
If  he  passes  work  and  in  good  faith  approves  it  expressly 

1  Ripley  v.  U.  S.,  223  U.  S.  695,  56  L.  Ed.  614. 

2  Ripley  v.  U.  S.,  223  U.  S.  695,  56  L.  Ed.  614;  Scully  v.  U.  S.,  197  Fed.  327; 
Bowery  Nat.  Bk.  v.  Mayor,  63  N.  Y.  336;  MacKnight  Flintic  Stone  Co.  v. 
Mayor,  160  N.  Y.  72,  54  N.  E.  661;  McGuire  v.  Rapid  City,  6  Dak.  346,  43 
N.  W.  706;  Schmidt  v.  North  Yakima,  12  Wash.  121,  40  Pac.  790;  Walsh 
Const.  Co.  V.  Cleveland,  271  Fed.  701,  711. 

'  Bowery  Nat.  Bk.  v.  Mayor,  suj/ra;  MacKnight  Flintic  S.  Co.  v.  Mayor, 
supra;  Scully  v.  U.  S.,  supra. 

*  EUzabeth  v.  Fitzgerald,  114  Fed.  547. 

376 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  262 

or  by  implication  during  its  progress,  this  decision  is  not 
open  to  his  objection.  He  cannot  reexamine  his  own  con- 
clusions after  the  work  is  done  and  refuse  a  certificate. 
After  he  examines  work  day  by  day  and  approves  of  it,  he 
may  not  thus  lead  a  contractor  into  the  belief  that  it  is 
satisfactory  and  when  the  work  is  completed  reject  it.^ 
The  fact  that  an  officer  approves  a  quarry  will  not  prevent 
his  passing  upon  the  quality  of  the  stone  from  it  when  the 
contract  so  provides.  While  his  decision  upon  the  quality 
of  stone  is  final  when  exercised,  he  cannot  exercise  it  in 
advance  or  forestall  his  judgment  or  that  of  other  compe- 
tent officers  who  might  be  designated  by  the  government, 
where  the  contract  provision  is  appropriate  to  that  end.- 
The  general  rule  is,  therefore,  that  where  a  certificate  of 
completion  is  unreasonably  or  in  bad  faith  refused  the 
contractor  may  recover  without  it  upon  proof  of  perform- 
ance and  of  such  refusal.^  When  the  parties  to  a  contract 
put  a  practical  construction  upon  the  contract  to  the 
effect  that  as  to  extra  and  additional  work  no  certificate 
determining  the  amount  or  value  thereof  is  required,  this 
is  a  waiver  of  the  contract  provision  requiring  a  certificate, 
and  the  contractor  may  recover  notwithstanding  the 
refusal  to  issue  it."* 

§  262.  Decision    or    Certificate    of    Engineer — Power    to 
Change  Decision  Once  Made. 

The  power  to  determine  questions  by  the  engineer  is 
derived  from  the  contract.     It  is  not  a  continuing  power. 

1  Lamson  v.  Marshall,  133  Mich.  250,  95  N.  W.  78;  Wildey  v.  Sch.  Dist.,  25 
Mich.  419,  424;  Schliess  v.  Grand  Rapids,  131  Mich.  52,  90  N.  W.  700;  Brady 
V.  Mayor,  132  N.  Y.  415,  30  N.  E.  757. 

2  U.  S.  V.  Barlow,  184  U.  S.  123,  133,  46  L.  Ed.  463. 

'  Bowery  Nat.  Bk.  v.  Mayor,  supra;  Whiteman  v.  Mayor,  21  Hun,  117,  121; 
Ross  V.  New  York,  85  N.  Y.  App.  Div.  611. 

*  Bradley  v.  MacDonald,  218  N.  Y.  351,  385,  395,  113  N.  E.  340. 

377 


§  262  ]  PERFORMANCE   AND   BREACH  [  PART  V 

He  may  not,  therefore,  find  work  finished  or  satisfactory- 
one  day  and  so  certify  and  revoke  his  certificate  and  find 
to  the  contrary  later.  WTien  he  once  makes  his  finding 
and  issues  his  certificate  his  power  to  determine  that 
question  is  exhausted.  His  power  ends  with  decision.  He 
may  not  subsequently  modify,  revoke  or  annul  that 
decision  or  make  a  new  one  on  the  same  question.^ 

§263.  Certificates  of  Engineer — Conclusive  in  Absence  of 
Mistake,  Bad  Faith,  etc. 
When  parties  to  a  contract  make  the  production  of  a 
certificate  from  an  architect,  engineer  or  other  officer  that 
the  work  is  completed  according  to  contract,  a  condition 
precedent  to  payment,  they  are  bound  by  this  provision  as 
much  as  any  other  term  of  the  contract.  It  is  not  enough 
for  a  contractor  to  show  that  he  has  completed  the  work. 
His  agreement  is  that  someone  else  should  decide  this. 
He  is  therefore  concluded  by  his  agreement  and  cannot  by 
bringing  an  action  withdraw  the  decision  of  this  question 
from  the  person  designated,  and  refer  it  to  a  legal  tribunal 
for  determination.-  It  is  usually  provided  that  the  de- 
cision or  approval  of  this  arbiter  shall  be  final  and  con- 
clusive when  given.  Such  a  term  of  the  contract  will  be 
enforced  by  the  courts  as  the  law  of  the  contract  and  the 
intention  of  the  parties  will  be  carried  out.  These  stipula- 
tions are  binding  and  conclusive  upon  the  parties  in  the 
absence  of  fraud  or  such  gross  mistake  as  necessarily 
implies  bad  faith.^     Or,  to  put  it  in  other  language,  the 

1  St.  Charles  v.  Stookey,  154  Fed.  772,  780. 

2  Smith  V.  Brady,  17  N.  Y.  173. 

'Barlow  t;  U.  S.,  35  Ct.  CI.  514,  184  U.  S.  123,  46  L.  Ed.  463;  Bowers 
Hyd.  D.  Co.  V.  U.  S.,  41  Ct.  CI.  214,  aff'd  211  U.  S.  176,  53  L.  Ed.  136;  U.  S. 
t;  Cooke  207  Fed.  682;  U.  S.  v.  Hurley,  182  Fed.  776;  Guild  v.  Andrews,  137 
Fed  369;  Bray  v.  U.  S.,  46  Ct.  CI.  132;  Henegan  v.  U.  S.,  17  Ct.  CI.  273; 
Lawrence  v.  New  York,  29  N.  Y.  App.  Div.  298,  162  N.  Y.  617;  Jones  v.  New 

378 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  263 

certificate  is  ordinarily  conclusive,  in  the  absence  of  proof 
of  corruption,  or  bad  faith,  or  misconduct  on  the  part  of 
the  person  designated,  or  palpable  mistake  appearing  on 
the  face  of  the  certificate.^  A  decision  by  the  engineer  as 
to  the  value  of  extra  work,  if  this  question  is  submissible 
to  him  under  the  contract,  is  conclusive.-  So  long  as  the 
engineer  acts  honestly  and  with  reasonable  efficiency  his 
action  is  binding  upon  the  parties.  His  decision  made  in 
good  faith  and  not  whimsically  will  be  conclusive  even 
though  somewhat  ignorantly  or  mistakenly  made.^  And  of 
course  a  certificate  procured  by  collusion  and  conspiracy 
between  the  contractor  and  the  architect  will  not  bind  the 
public  body.^  In  determining  the  question  as  to  whether 
the  action  of  the  engineer  is  in  bad  faith  and  the  result  of 
failure  to  exercise  an  honest  judgment,  if  an  engineer 
commits  gross  mistakes,  which  an  engineer  of  his  experi- 
ence and  competence,  acting  honestly,  would  not  be 
reasonably  supposed  to  make,  which  are  not  reconcilable 
with  mere  negligence  or  errors  of  judgment,  and  which 
materially  favored  one  party  to  the  contract  at  the  ex- 
pense of  the  other,  a  strong  implication  of  bad  faith  will 
arise,    which   unexplained   will   be   considered   conclusive.^ 

York,  32  Misc.  211,  60  N.  Y.  App.  Div.  161,  174  N.  Y.  517;  O'Brien  v.  Mayor, 
139  N.  Y.  543,  35  N.  E.  323;  Burke  v.  Mayor,  7  N.  Y.  App.  Div.  128;  Snyder 
V.  N.  Y.,74  N.  Y.  App.  Div.  421;  City  St.  Improv.  Co.  v.  MarysviUe,  155  Cal. 
419,  101  Pac.  308;  McGuire  v.  Rapid  City,  6  Dak.  346,  43  N.  W.  706;  Beattie 
V.  McMullen,  82  Conn.  484,  74  Atl.  767;  Caldwell  et  al.  v.  Pierce,  154  Ky.  328, 
157  S.  W.  692;  Hatfield  Sch.  Dist.  v.  Knight,  112  Ark.  83,  164  S.  W.  1137; 
Malone  v.  Phila,  12  PhUa.,  270;  Wildey  v.  Sch.  Dist.,  25  Mich.  419. 

lEverard  v.  Mayor,  89  Hun,  425;  Sewer  Comm'rs  v.  Sullivan,  11  N.  Y. 
App.  Div.  472,  162  N.  Y.  594,  57  N.  E.  1123;  MaUoy  v.  Briarcliff  Manor, 
145  N.  Y.  App.  Div.  483;  Uvalde  Cont.  Co.  v.  New  York,  160  N.  Y.  App.  Div. 
284;  Quinn  v.  Mayor,  16  Id.  408. 

2  Bd.  of  Educ.  of  Paola  v.  Shaw,  15  Kan.  33;  Rens  v.  Grand  Rapids,  73  Mich. 
237,  41  N.  W.  263;  Swift  v.  New  York,  89  N.  Y.  52. 

3  Evans  v.  Middlesex  County,  209  Mass.  474,  95  N.  E.  897. 
*  School  District  v.  Randall,  5  Neb.  408. 

6  Guild  V.  Andrews,  137  Fed.  369. 

379 


§  264  ]  PERFORMANCE   AND   BREACH  [  PART  V 

§  264.  The  Same — Conclusiveness — Estoppel  Clause. 

In  many  public  contracts  a  clause  is  inserted  to  the 
effect  that  the  public  body  will  not  be  precluded  or 
estopped  by  any  return  or  certificate  made  by  the  engineer 
or  other  public  representative  from  at  any  time  showing 
the  true  and  correct  amount  and  character  of  the  work 
which  shall  have  been  done  and  materials  which  shall 
have  been  furnished  by  the  contractor.  After  a  certificate 
of  the  engineer  has  been  given  and  the  work  has  been 
accepted,  the  public  body  are  boxuid  by  it  as  much  as  the 
contractor,  in  the  absence  of  fraud  or  palpable  mistake, 
and  unless  such  be  claimed,  the  public  body  cannot 
under  such  an  estoppel  clause  question  anything  except 
the  amount  of  work  done.  While  it  may  show  that  the 
work  accepted  was  not  the  work  that  was  agreed  to  be 
done  and  that  the  materials  put  into  it  were  different 
from  those  required  by  the  contract,  or  were  less  in 
amount  than  the  public  body  was  apparently  entitled  to 
under  the  certificate,  yet  it  is  not  free  to  show,  in  spite  of 
the  certificate,  that  the  materials  which  were  put  into  the 
work  and  accepted  were  not  proper  because  of  some 
defect  in  them,  or  in  the  way  in  which  the  work  was  done, 
if  the  materials  furnished  are  of  the  general  description 
and  kind  called  for  under  the  contract.^ 

§  265.  The  Same — ^When    not    Binding    or  Conclusive. 

The  estimate  of  an  engineer  is  only  binding  and  con- 
clusive as  an  adjudication,  upon  the  condition  that  it  is 
made  according  to  the  terms  of  the  submission.  In  order 
to  prevent  the  courts  from  considering  the  question,  it 
must  clearly  appear  that  the   subject-matter  of  the  con- 

»  Brady  v.  Mayor,  132  N.  Y.  415,  30  N.  E.  757;  O'Brien  v.  Mayor,  139  N.  Y. 
543,  35  N.  E.  323;  Quinn  v.  Mayor,  16  N.  Y.  App.  Div.  408;  Devlin  v.  New 
York,  124  Id.  184. 

380 


<:HAP.  XXXVIII  ]  PERFORMANCE  [  §  265 

troversy  was  within  the  prospective  submission.^  The 
engineer  may  not  introduce  new  terms  into  the  contract. 
He  has  no  power  to  determine  what  he  thinks  the  contract 
ought  to  be.  If  he  attempts  to  exercise  such  power  his 
estimates  or  decisions  are  not  conclusive.  ^  The  general 
rule  is  that  he  cannot  bind  the  parties  as  to  mattere  out- 
side the  contract.^  His  authority  will  not  be  extended  to 
disputes  arising  under  a  subsequent  independent  verbal 
agreement  relating  to  extra  work.''  His  power  of  decision 
will  not  cover  questions  of  law,  as  for  instance,  the  question 
of  ultimate  liability  to  pay  ^  or  the  amount  of  compensa- 
tion due.^  The  power  to  construe  the  contract  itself  will 
not  be  considered  as  granted  to  the  architect  or  engineer 
by  inference  or  imphcation,  or  anything  short  of  a  distinct 
waiver.  The  power  to  determine  the  meaning  and  con- 
struction of  drawings  and  specifications  will  not  submit  to 
his  decision  the  contract  rights  of  the  parties.^  So  also 
questions  of  law  as  to  the  liability  of  a  contractor  to  pay 
liquidated  damages  for  failure  to  do  certain  work  in 
time^  or  damages  for  the  non-fulfillment  of  the  contract,^ 
are  outside  the  scope  of  his  power.  Where  a  person 
designated  to  act  as  arbiter  is  an  employee  of  the  public 
body,  a  letter  sent  by  him  giving  notice  to  repair  certain 

1  Dhrew  v.  Altoona,  121  Pa.  St.  041,  15  Atl.  636;  Ruch  v.  City  of  York,  233 
Pa.  St.  36,  81  Atl.  891. 

2  Dhrew  v.  Altoona,  supra. 

^  Ruch  V.  City  of  York,  supra;  Harlow  v.  Homestead,  194  Pa.  St.  57,  45 
Atl.  87;  Dyer  v.  Middle  Kittitas  Irrig.  Dist.,  40  Wash.  238,  82  Pac.  301; 
Clark  &  Sons  Co.  v.  Pittsburgh,  146  Fed.  441,  154  Fed.  464;  Gammino  v. 
Dedhain,  164  Fed.  593. 

*  Douglass  et  al.  v.  Morrisville,  84  Vt.  302,  79  Atl.  391. 

^  Idem. 

^  Gammino  v.  Dedham,  supra. 

^iEtna  Indem.  Co.  v.  Waters,  110  Md.  673,  73  Atl.  712;  Baltimore  v. 
■Schaub  Bros.,  96  Md.  534,  54  Atl.  106;  Gammino  v.  Dedham,  supra. 

8  King  Iron  &  B.  Co.  v.  St.  Louis,  43  Fed.  768,  10  L.  R.  A.  826. 

'  Ruch  V.  City  of  York,  supra. 

381 


§  265  ]         PERFORMANCE  AND  BREACH        [  PART  V 

work,  is  not  action  as  arbiter  but  as  agent  of  the  public 
body,  and  his  decision  is  not  binding.^  And  wherever 
under  the  contract,  matters  within  the  scope  of  his  author- 
ity come  up  for  decision,  these  are  not  conclusive  when  not 
the  result  of  honest  judgment,  made  in  good  faith  and 
free  from  fraud,  or  mistake  amounting  to  fraud. ^  Any 
decision  which  is  not  his  judgment,  but  the  mere  ex- 
pression of  the  views  or  the  influence,  whether  inten- 
tionally or  innocently  exercised,  of  others,  is  outside  the 
contract  and  without  force.  ^ 

§266.  The  Same — Not  Conclusive — When  Based  on 
Erroneous  Construction  of  Contract. 
Where  an  engineer  under  an  erroneous  construction  of 
the  contract  and  of  the  rights  of  the  parties  thereunder, 
dehberately  excludes  from  his  final  certificate  work  actually 
done  by  the  contractor,  and  required  by  the  contract,  his 
decision  is  not  final  and  binding  upon  the  contractor, 
but  may  be  attacked  for  palpable  error,  and  the  latter 
has  a  right  to  recover  notwithstanding  the  provisions  of 
the  contract  in  regard  to  the  final  certificate.^ 

§267.    The    Same — Conclusiveness — Where    Contract 
Illegal. 

If  a  contract  turns  out  to  be  illegal  after  perforaiance 
and  certificates  of  performance  have  been  issued  under  the 
contract,  such  certificates  of  performance  and  completion 

1  St.  Charles  v.  Stookey,  154  Fed.  772. 

2  Baltimore  v.  Ault,  126  Md.  402,  94  Atl.  1044;  Evans  v.  Middlesex,  209 
Mass.  474,  95  N.  E.  897;  Wildey  v.  Frac.  Sch.  Dist.,  25  Mich.  419;  McCormick 
V.  St.  Louis,  166  Mo.  315,  65  S.  W.  1038;  Burns  v.  New  York,  31  Misc.  315,  69 
N.  Y.  App.  Div.  214;  Penn.  B.  Co.  v.  Kershaw,  226  Fed.  728. 

*  Baltimore  v.  Ault,  supra. 

*  Burke  v.  Mayor,  7  N.  Y.  App.  Div.  128;  Uvalde  Cont.  Co.  v.  New  York, 
160  Id.  284;  Croton  Falls  Cons.  Co.  v.  New  York,  168  Id.  261;  Malloy  v.  Briar- 
cliff  Manor,  145  Id.  483;  Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E.  804. 

382 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  268 

are  not  conclusive  evidence  against  the  public  body  that 
the  contractor  is  entitled  to  be  paid.  The  certificate 
issued  under  a  contract  cannot  have  any  greater  validity 
than  the  contract  itself  of  which  it  is  a  mere  part.^ 

§  268.  The  Same — When  Provision  not  Applicable. 

Where  the  public  body  has  an  absolute  right  under  the 
terms  of  a  contract  to  oust  the  contractor  from  the  work 
and  it  acts  under  this  power,  the  arbitration  clause  of  the 
contract  cannot  apply  and  its  election  to  act  under  the 
ouster  clause  is  a  waiver  of  arbitration.  In  hke  manner 
the  provision  for  a  final  certificate  to  be  obtained,  upon 
completion  of  the  work,  before  a  contractor  is  entitled  to 
final  payment  does  not  apply  where  the  public  body  takes 
over  and  completes  the  work.  The  obtaining  of  it  is  not, 
therefore,  a  condition  precedent  to  suit  by  the  contractor 
for  any  balance  claimed  to  be  due  under  the  contract.^ 
Where  a  contract  required  a  contractor  to  obtain  his  final 
estimate  from  certain  architects,  and  in  case  the  architects 
were  discharged  to  obtain  it  from  the  public  board  itself, 
and  the  architects  were  discharged  several  months  before 
the  contractor  instituted  his  suit,  and  he  made  repeated 
demands  before  suit  for  payment  from  the  public  board, 
which  were  refused,  the  failure  to  produce  the  architects' 
final  certificate  or  explain  its  absence  becomes  of  no 
consequence.^ 

It  is  unnecessary  to  produce  a  certificate  where  a 
contractor  is  driven  from  the  work  which,  up  to  the  time 
it  was  stopped,  was  properly  performed.*    Where  a  con- 

1  Hart  V.  New  York,  201  N.  Y.  45,  55,  94  N.  E.  219. 

2  Jonathan  Clark  &  Sons  Co.  v.  Pittsburgh,  146  Fed.  441,  154  Id.  464. 
» Germain  v.  Union  Sch.  Dist.,  158  Mich.  214,  122  N.  W.  524. 

*  Clark  &  Sons  Co.  v.  Pittsburgh,  supra;  Kingsley  v.  Brooklyn,  78  N.  Y. 
200,  216;  O'Corr  &  Rugg  Co.  v.  Little  FaUs,  77  N.  Y.  App.  Div.  592,  178  N.  Y. 
622. 

383 


§268]         PERFORMANCE  AND  BREACH        [  PART  V 

tract  provided  for  payment  of  material  only  after  it  was 
accepted  by  the  supervising  architect  and  the  contractor 
puts  it  beyond  the  power  of  the  vendor  to  furnish  evidence 
of  inspection  or  approval  by  an  arbiter  the  production  of 
the  certificate  is  not  obligatory.^  If  performance  of  an 
act  required  to  be  performed  in  connection  with  the 
execution  of  a  contract  is  prevented  by  the  other  party, 
non-performance  is  excused. ^ 

§  269.  The    Same — When    Production    not    Required — 
When  Provision  not  Applicable. 

The  provisions  of  the  contract  and  specifications  which 
make  the  engineer  the  arbiter  with  reference  to  the  work 
done  under  the  contract  and  which  require  his  certificate 
for  work  so  done  before  a  contractor  will  be  entitled  to 
pajTnent  do  not  apply  to  actions  for  breach  of  the  con- 
tract. In  an  action  for  a  breach  of  warranty  or  for  damage 
for  false  representations  as  to  conditions  at  the  site,  such 
provisions  will  not  apply  as  such  an  action  is  not  for  work 
done  under  the  contract,  but  for  damages  for  its  breach. ^ 
When  a  contractor  is  required  to  do  work  a  second  time 
which  was  already  done  in  compUance  with  the  contract, 
the  action  is  in  like  manner  for  breach  of  the  contract 
and  the  provision  regarding  a  certificate  has  no  applica- 
tion.'^ So  when  he  is  required  to  do  work,  not  called  for 
by  his  contract  but  not  clearly  outside  of  it,  and  he  per- 
forms it  under  protest  and  he  sues  for  breach  of  the  con- 
tract, not  for  extra  work  done  under  it,  a  certificate  is 
unnecessary.^     Generally  when   the   action   is   to   recover 

1  U.  S.  V.  Jack,  124  Mich.  210,  82  N.  W.  1049. 

^Kingsley  v.  Brooklyn,  supra;  U.  S.  v.  Jack,  supra. 

3  P^aber  v.  New  York,  222  N.  Y.  255,  118  N.  E.  609. 

*  Gearty  v.  Mayor,  171  N.  Y.  61,  63  N.  E.  804. 

6  Borough  Cons.  Co.  v.  New  York,  200  N.  Y.  149,  93  N.  E.  480. 

384 


CHAP.  XXXVIII  ]  PERFORMANCE  [  §  270 

damages  for  breach  of  the  contract,  the  provision  requiring 
a  certificate  has  no  application.^  Usually  it  has  no  ap- 
plication where  a  public  body  gives  notice  that  it  will  take 
charge  of  the  work  and  complete  the  contract,  and  the 
contractor  sues  to  recover  a  claimed  balance.-  In  such 
case  he  is  not  required  to  produce  the  certificate.  And 
the  omission  to  procure  a  certificate  as  to  the  value  of 
extra  work  cannot  affect  the  right  of  recovery  where  the 
suit  is  not  upon  the  contract  but  in  assumpsit.  Even  if  a 
contractor  does  not  fully  perform  his  special  contract,  he 
still  may  have  resort  to  the  courts  upon  the  common 
counts.^ 

§  270.  The  Same— Waiver. 

These  provisions  of  the  contract  providing  for  a  certifi- 
cate of  completion  which  constitute  a  condition  precedent 
to  payment  may  be  waived,  since  they  are  inserted  for  the 
benefit  of  the  pubhc  body.^  Either  party  to  a  contract  is 
at  liberty  to  insist  upon  a  strict  performance  of  the  con- 
tract terms,  but  he  may  likewise  waive  any  of  its  provisions 
made  for  his  benefit.^  This  waiver  may  be  either  express 
or  imphed.^  A  statutory  duty  to  obtain  such  a  certificate 
may  not  be  waived.^  It  is  only  contractual  stipulations 
that   may   be   so   treated.      The   public   body   alone   can 

1  Fontano  &  Robbins,  18  App.  D.  C.  402;  Gearty  v.  Mayor,  supra;  Borough 
Cons.  Co.  V.  New  York,  supra;  Markey  v.  Milwaukee,  76  Wis.  349,  45  N.  W. 
28. 

2  Clark  &  Sons  Co.  v.  Pittsburgh,  146  Fed.  441,  154  Fed.  464. 

3  Bd.  of  Comm'rs  Fulton  County  v.  Gibson,  158  Ind.  471,  63  N.  E.  982. 
*  Bradley  v.  McDonald,  218  N.  Y.  351,  113  N.  E.  340;  Bowery  Nat.  Bk.  v. 

Mayor,  63  N.  Y.  336;  Bader  v.  New  York,  51  Misc.  358;  Clark  &  Sons  Co.  v. 
Pittsburgh,  146  Fed.  441,  154  Fed.  464;  Clark  v.  Pope,  70  111.  128;  Douglass 
i;.  MorrisviUe,  84  Vt.  302,  79  Atl.  391. 

^  Bradley  v.  McDonald,  supra. 

« Preston  v.  Syracuse,  92  Hun,  301,  158  N.  Y.  356,  53  N.  E.  39;  Maurer  v. 
Sch.  Dist.,  186  Mich.  223,  152  N.  W.  999. 

7  See  O'Dea  v.  MitcheU,  144  Cal.  374,  77  Pac.  1020;  Reid  v.  Clay,  134  Cal. 
207,  66  Pac.  262. 

385 


§  270  ]         PERFORMANCE  AND  BREACH        [  PART  V 

waive  a  provision  of  this  kind;  it  cannot  be  waived  by  the 
engineer.^ 

§  271.  Acceptance  of  Work  as  Waiver  of  Certificate  of 
Engineer. 
In  construction  contracts  where  someone  is  appointed 
by  the  contract  to  supervise  the  work  on  behalf  of  the 
pubHc  body,  the  acceptance,  by  such  appointee  of  the 
work  of  construction  as  it  progresses,  is  ordinarily  con- 
clusive upon  the  public  body.^  But  in  determining  thiis 
question  recourse  must  be  had  to  the  extent  of  power 
conferred  upon  the  engineer,  and  the  terms  of  the  con- 
tract. Where  a  contract  provides  that  the  contractor 
shall  be  responsible  for  the  work  as  a  whole  until  accepted 
by  the  public  body,  acceptance  by  the  engineer  will  not 
bind  or  operate  as  a  waiver  of  the  condition  which  makes 
pa\Tnent  dependent  upon  the  obtaining  of  a  certificate.^ 
Where  an  engineer  expressly  consents  to  unauthorized 
performance  and  material  deviations  from  specifications 
and  accepts  a  different  class  of  work  than  that  provided, 
such  acts  will  not  bind  the  pubUc  body.  Acceptance  of 
the  work  and  payment  of  the  contractor  after  a  test  will 
not  conclude  the  pubhc  body,  when  made  in  ignorance  of 
facts,  which,  if  known,  would  have  precluded  acceptance  or 
at  least  justified  refusal  of  acceptance.  When  subsequently 
discovered  the  pubhc  body  has  a  right  to  recover  the  dam- 
ages sustained  by  breach  of  the  contract,  as  the  acceptance 
during  progress  of  the  work  did  not  effect  an  estoppel  or 
constitute  a  waiver  of  more  complete  performance,  and  such 
action  survives  such  acceptance  and  final  payment.* 

1  Malloy  V.  Briarcliff  Manor,  145  N.  Y.  App.  Div.  483,  491. 

2  U.  S.  V.  Walsh,  115  Fed.  697;  Lamson  ?;.  Marshall,  133  Mich.  250,95  N.  W.  78. 
'  Sterling  v.  Kurd,  44  Colo.  436,  98  Pac.  174. 

*  U.  S.  V.  Walsh,  supra. 

386 


CHAPTER  XXXIX 

PERFORMANCE — PARTIAL  PERFORMANCE 

§  272.  Performance — Partial    Performance — Entire    Con- 
tract. 

The  complete  performance  of  an  entire  public  contract 
is  usually  a  condition  precedent  to  a  contractor's  right  of 
recovery  and  to  the  maintenance  of  an  action  therefor.^ 
A  party  to  an  entire  contract  who  has  partly  performed 
it  and  subsequently  abandons  the  further  performance 
according  to  its  stipulations,  voluntarily  and  without  fault 
on  the  part  of  the  other  party  or  his  consent  thereto, 
can  recover  nothing  for  such  part  performance.-  Where  a 
contract  required  rock  to  be  excavated  two  feet  below  the 
line  of  the  curbstone  grade,  and  a  contractor  excavated 
only  one  foot,  and  instead  of  depositing  rock  in  the 
street  and  in  the  river  in  continuation  of  the  street  as 
provided  in  the  specifications,  sold  and  disposed  of  it 
for  his  own  benefit,  this  is  a  palpable  and  willful  violation 
of  the  contract  and  non-performance  in  such :  important 
particulars  as  will  prevent  recovery.  ^  Where  a  contract 
calls  for  drawing  of  plans  and  superintending  the  erection 
of  a  court  house,  and  the  latter  services  are  not  rendered 
and  no  good  excuse  is  given  for  not  rendering  them,  no 

iBonesteel  v.  Mayor,  22  N.  Y.  165;  Clark  v.  Bd.  of  Comm'rsTof '  Osage 
County,  62  Okla.  7,  161  Pac.  791;  MacFarland  v.  Barber' A.  P.  Co^  29  App. 
D.  C.  506. 

2  Spalding  County  v.  Chamberlin  &  Co.,  130  Ga.  649,  61  S.  E.'533;^Clark  v. 
Bd.  of  Comm'rs  Osage  County,  62  Okla.  7,  161  Pac.  791;  Douglas  v.  Lowell, 
194  Mass.  268,  80  N.  E.  510. 

^  Bonesteel  v.  New  York,  supra. 

387 


§  272  ]  PERFORMANCE   AND   BREACH  [  PART  V 

recovery  is  permitted,  since  the  contract  is  entire.^  When 
a  contract  is  terminated  by  the  public  body  against  the 
will  of  the  contractor,  who  is  prevented  from  further 
performance,  he  is  not  confined  to  the  contract  price,  but 
nmy  bring  his  action  for  breach  of  the  contract  and 
recover  as  damages  all  that  he  may  lose  by  way  of  profits, 
in  not  being  allowed  to  fulfill  the  contract;  or  he  may 
waive  the  contract  and  bring  his  action  on  the  common 
counts  and  recover  the  actual  value  of  the  work  done.  In 
the  latter  case  no  recovery  is  allowed  for  prospective 
profits,  but  the  actual  value  of  the  labor  and  materials  is 
the  rule  of  damage.-  Of  course  any  contractor  who  per- 
forms the  part  of  an  entire  contract  which  is  profitable  to 
him  and  abandons  the  part  which  is  unprofitable  should 
have  no  aid  in  court.  Willful  abandonment  of  a  contract 
without  cause  will  never  receive  the  protection  of  the 
courts.  To  grant  protection  would  be  to  permit  a  man  to 
profit  by  his  own  wrong.  Some  courts,  in  order  to  carry 
out  equitable  principles  and  prevent  injustice,  are  prone 
to  consider,  in  modern  times,  that  the  entirety  is  destroyed 
by  part  performance  and  raise  an  implied  promise  to  pay 
for  the  benefits  received.  But  this  is  a  mild  fiction.  The 
better  rule  is,  if  the  contract  is  in  fact  entire,  that  the 
law  leave  the  loss  where  the  contract  places  it.^ 

Where  a  contract  has  been  partially  performed  and  the 
contractor  fails   to   complete   the  contract  in  accordance 


'  Spalding  County  v.  Chamberlin,  supra. 

2  DevUn  v.  New  York,  63  N.  Y.  8;  Clark  v.  Mayor,  4  N.  Y.  338;  Jones  v. 
Judd,  4  N.  Y.  411;  Masterson  v.  Brooklyn,  7  Hill,  61,  75;  Sauer  v.  Sch.  Dist. 
McKees  Rocks,  243  Pa.  St.  294,  90  Atl.  150;  Glidden  St.  Bk.  i;.Sch.  Dist., 
143  Wis.  617,  128  N.  W.  285.  But  see  Carlin  v.  New  York,  132  N.  Y.  App. 
Div.  90. 

'  Dermott  v.  Jones  (Ingle  v.  Jones),  2  Wall.  (U.  S.),  1,  17  L.  Ed.  762;  David- 
son V.  Gaskill,  32  Okla.  40,  121  Pac.  649,  38  L.  R.  A.  n.  s.  692;  National  Cont. 
Co.  V.  Comm.,  183  Mass.  89,  66  N.  E.  639. 


CHAP.  XXXIX  ]  PARTIAL    PERFORMANCE  [  §  273 

with   its   terms,    the   measure  of  damage  is   the   cost   of 
completion.^ 

Where  the  contract  is  still  executory  on  the  part  of  the 
injured  party,  his  damage  is  the  difference  between  the 
cost  of  completion  and  the  contract  price. - 

§  273.  Acceptance  of  Benefits. 

Even  though  the  work  done  or  the  structure  erected 
pursuant  to  a  contract,  is  not  done  in  accordance  with 
its  terms,  if  what  has  been  done  is  accepted,  it  is  fair  and 
right  that  the  public  body  receiving  the  benefits  should 
pay  what  these  are  worth.  In  many  instances  public 
work  is  done  under  a  special  contract  which  does  not 
conform  to  its  terms  either  in  point  of  time  or  in  any 
other  respect,  yet  if  the  party  accepts  the  work  as  done 
the  contractor  may  recover  its  value  upon  the  common 
counts.^  This  principle  is  also  appHed  in  cases  where  the 
contract  cannot  be  rescinded,  but  from  its  nature  the 
work  performed  must  enure  to  the  benefit  of  the  other, 
and  where  it  would  be  unjust  for  such  party  to  retain  the 
benefits  without  compensation.  In  these  cases  the  con- 
tractor must  deduct  from  his  contract  price  such  a  sum 
as  will  enable  the  public  body  to  complete  the  contract 
according  to  its  terms,  or  if  that  is  impossible  or  unreason- 
able such  sum  as  will  fully  compensate  for  the  imperfection 
or  insufficiency  in  work  or  materials.  The  contractor  must 
also    deduct    such    additional    or    consequential    damages 

1  Boise  City  v.  Nat.  Surety  Co.,  30  Idaho,  455,  165  Pac.  131;  New  York  v. 
Second  Ave.  R.  Co.,  102  N.  Y.  572,  7  N.  E.  905;  Newton  v.  Devlin,  134  Mass. 
490. 

2  Nat.  Cont.  Co.  v.  Hudson  R.  W.  P.  Co.,  118  N.  Y.  App.  Div.  665,  reversed 
O.  G.  192  N.  Y.  209,  84  N.  E.  965;  Smith  v.  Copiah  County,  239  Fed.  425, 
aff'd  239  Fed.  432;  Peirce  v.  Cornell,  117  N.  Y.  App.  Div.  66. 

3  Baltimore  v.  Kinlein,  118  Md.  336,  84  Atl.  483;  Skowhegan  Water  Co.  v. 
Skowhegan,  102  Me.  323,  66  Atl.  714. 

389 


§  273  ]  PERFORMANCE   AND   BREACH  [  PART  V 

which  his  breach  may  have  occasioned  to  the  pubhc  body. 
The  contractor  must  also  deduct  all  payments  made.^ 
The  same  general  principles  will  likewise  apply  where  the 
work  has  proved  impossible  of  performance  through  no 
fault  of  the  public  body.^  The  recovery  allowed  will  be 
upon  quantum  meruit,  but  no  recovery  for  loss  of  profits 
will  be  permitted.^ 

§  274.  Entire  Contract — Willful  Refusal  to  Perform. 

A  pubhc  contract  for  the  complete  construction  of  a 
building,  structure  or  work  is  an  entire  contract,  and  the 
willful  refusal  by  the  contractor  to  complete  the  building 
entitles  the  public  body  to  a  return  of  the  installments 
paid.* 

§  275.  Breach  by  Both  Parties. 

WTiere  both  parties  break  the  contract,  and  the  breaches 
by  the  pubhc  body  are  a  perfect  or  partial  excuse  for  the 
contractor's  failure,  the  latter's  breaches  are  not  a  com- 
plete defense  to  his  action  to  recover  the  value  of  labor 
performed  and  materials  furnished.  A  party  to  a  con- 
tract, whose  failure  to  perform  it  has  contributed  to  the 
failures  of  the  other  party  to  perform,  cannot  urge  that 
the  failures  of  the  latter  are  an  absolute  defense  to  an 
action  brought  by  hun  to  recover  for  partial  performance.^ 

1  Kelly  V.  Bradford,  33  Vt.  35;  Skowhegan  Water  Co.  v.  Skowhegan,  102 
Me.  323,  66  Atl.  714;  Baltimore  v.  Kinlein,  118  Md.  336,  84  Atl.  483;  Sherman 
V.  Cornier,  88  Tex.  35,  29  S.  W.  1053;  Sherman  v.  Conner,  72  S.  W.  (Tex.) 
238;  Lyman  v.  Lincoln,  38  Neb.  794,  57  N.  W.  531;  Manning  v.  Ft.  Atkinson 
Sch.  Dist.,  124  Wis.  84,  102  S.  W.  356.  See  Roettinger  v.  U.  S.,  26  Ct.  CI.  391; 
Ward  V.  Kropf,  207  N.  Y.  467,  101  N.  E.  469. 

2  Kinser  v.  State,  125  N.  Y.  Supp.  46,  145  App.  Div.  41, 204  N.  Y.  381,  97 
N.  E.  871. 

^  Kinser  v.  State,  supra. 

*  Trenton  v.  Bennett,  27  N.  J.  L.  513,  517,  72  Am.  Dec.  373;  Tompkins  v. 
Dudley,  25  N.  Y.  272,  82  Am.  Dec.  349;  U.  S.  v.  U.  S.  Fid.  &  G.  Co.,  236  U.  S. 
512,  525,  59  L.  Ed.  696. 

'  Delafield  v.  Westfield,  41  N.  Y.  App.  Div.  24,  169  N.  Y.  582,  62  N.  E.  1095. 

390 


CHAP.  XXXIX  ]  PARTIAL   PERFORMANCE  [  §  278 

§  276.  Suspension  of  Work. 

When  a  contractor  is  entitled  to  receive  an  installment 
payment  under  his  contract  and  the  public  body  refuses  to 
make  the  payment  and  the  contractor  thereupon  suspends 
the  work  and  does  not  resume  it  until  the  installment  is 
paid,  the  acceptance  of  payment  of  the  principal  of  the 
installment  is  a  waiver  of  the  right  to  payment  of  interest, 
as  damages  for  failure  to  make  the  deferred  payment.  If 
the  failure  to  pay  the  money  constitutes  a  breach  of  the 
contract,  the  contractor  to  protect  himself  in  his  damages 
must  pursue  one  of  two  remedies:  he  must  stop  the  work, 
repudiate  the  contract  and  recover  the  contract  price  for 
the  work  done,  or  he  must  continue  the  work  and  sue  for 
the  past  due  installment  and  recover  interest  thereon  as 
his  measure  of  damages  for  withholding  payment.^ 

§  277.  Measure  of  Recovery  where  Part  of  Work  is  Per- 
formed by  Strangers. 

If  a  contractor  with  a  public  body  is  engaged  to  excavate 
and  remove  certain  earth  and  payment  is  provided  for  by  a 
unit  price  for  each  yard  of  earth  excavated,  and  some  of 
the  earth  included  in  his  contract  is  removed  and  carried 
away  by  a  stranger  to  the  contract,  who  was  excavating  on 
adjoining  land,  before  the  contractor  entered  upon  the 
performance  of  the  work,  and  neither  party  to  the  contract 
took  any  step  to  prevent  such  stranger  from  removing  the 
earth,  the  contractor  may  not  adopt  the  acts  of  the 
stranger  as  his  own  and  recover  for  the  material  excavated 
by  such  stranger.  2 

§  278.  Illegal  Contract. 
Where  a  contract  is  illegal  in  part  and,  although  there  is 

^  Mechanics'  Bank  v.  New  York,  164  N.  Y.  App.  Div.  128. 
2  St.  George  Cont.  Co.  v.  New  York,  205  N.  Y.  121,  98  N.  E.  387. 

391 


§  278  ]  PERFORMANCE   AND   BREACH  [  PART  V 

but  one  written  agreement  covering  several  undertakings, 
it  may  safely  be  said  that  such  instrument  sets  forth 
several  contracts,  one  relating  to  each  undertaking,  or  else 
that  it  sets  forth  a  contract  covering  several  independent 
and  separable  subjects,  in  either  event  it  may  be  held  vahd 
as  to  some  and  invalid  as  to  other  parts  and  recovery  will 
be  permitted  upon  the  former.^  Where  chattels  or  supplies 
have  been  deUvered  under  a  void  contract  the  contractor 
may  recover  them  in  replevin,  where  the  public  body  re- 
fuses to  pay  for  them  because  the  contract  is  void.^ 

§  279.  Prevention  of  Performance  Because  of  Invalidity  of 
Contract  after  Partial  Performance. 
Where  a  pubUc  contract  becomes  invalid  because  of  a 
failure  to  observe  some  requirement  of  law,  and,  after  a 
partial  performance,  complete  performance  is  prevented  by 
law,  a  recoveiy  may  be  had  for  benefits  conferred  by  part 
performance,  upon  the  principle  of  the  maxim  that  no  one 
shall  be  made  rich  by  making  another  poor.  The  recovery, 
however,  is  not  upon  the  basis  of  the  contract,  which  is 
invalidated,  but  upon  an  implied  agreement  founded  upon 
a  moral  obligation  to  account  for  the  moneys  or  property 
received  or  the  value  of  the  work  where  the  public  body 
subsequently  appropriates  and  utilizes  the  work.  Under 
such  circmnstances  the  contractors  acquire  a  right  and  the 
public  body  becomes  subjected  to  a  liability,  by  virtue  of 
a  new  and  quasi-contractual  relation  founded  in  justice.^ 

§  280.  Interference  with  Contractor  during  Performance — 
Remedy  in  Equity — Injunction. 
If    during    performance    of    a    contract    public    officials 

1  Hart  V.  New  York,  201  N.  Y.  45,  94  N.  E.  219. 

2  LaFrance  Eng.  Co.  v.  Syracuse,  33  Misc.  516. 
'  Ward  V.  Kropf,  207  N.  Y.  467,  101  N.  E.  469. 

392 


CHAP.  XXXIX  ]  PARTIAL    PERFORMANCE  [  §  280 

interfere  with  a  contractor  and  interrupt  the  performance 
of  his  obhgations,  or  violate  or  refuse  to  perform  conditions 
precedent  which  must  be  performed  by  the  pubHc  body 
and  the  contractor  has  no  adequate  remedy  at  law  because 
the  damages  which  he  would  be  entitled  to  recover  are  not 
capable  of  any  accurate  determination,  and  would  have  to 
be  ascertained  upon  a  basis  so  uncertain  as  not  to  afford 
adequate  redress  or  would  not  place  him  in  the  same  posi- 
tion which  he  occupied  at  the   time   of   the   breach,  an 
injunction  will  be  granted  to  restrain  such  interference  or 
refusal.^     The    law    should    prevent    the    commission    of 
wrongs  whenever  a  party  presents  a  clear  right  and  its 
violation.     It  is  not  enough  to  redress  the  wrong  merely 
after  it  is  committed.     Whenever  it  is  possible  and  equi- 
table  a   party  should   be  compelled  to   perform   his   just 
obligation,  and  the  courts  should  interfere  to  prevent  a 
violation    of    rights.      Accordingly   where    a   public    body 
attempts  to  impose  new  and  burdensome  conditions  upon 
the  contractor  and  requires  him  to  abandon  the  method 
of  doing  the  work  provided  by  the  contract  and  his  remedy 
at  law  would  be  inadequate,  the  interference  will  be  en- 
joined.^    Where  a  contract  provides  for  the  erection  of 
certain  structures  at  the  joint  expense  of  the  contracting 
parties   but    directs    that   these    structures    shall    not    be 
erected  until  other  work  is  furnished  and  until  their  erec- 
tion is  by  vote  of  commissioners  determined  to  be  neces- 
sary, and  it  is  impossible  to  ascertain  the  damages  which 
would  be  suffered  from  a  violation  of  the  contract  terms, 
an  injunction  will  lie.^    An  injunction  against  a  breach  of 

1  Dailey  v.  New  York,  86  Misc.  86,  170  N.  Y.  App.  Div.  267,  218  N.  Y.  665, 
113  N.  E.  1053;  Erie  R.  R.  Co.  v.  Buffalo,  180  N.  Y.  192,  73  N.  E.  26;  WaUa 
WaUa  V.  WaUa  Walla  W.  Co.,  172  U.  S.  1,  43  L.  Ed.  341,  aff'g  60  Fed.  957. 

2  Dailey  v.  New  York,  supra. 

^  Erie  R.  R.  Co.  v.  Buffalo,  supra. 

393 


§  280  ]  PERFORMANCE  AND  BREACH        [  PART  V 

contract  is  in  a  sense  indirectly  accomplishing  specific 
performance,  and  while  it  is  true  that  specific  performance 
will  usually  not  be  granted  and  cannot  be  granted  where 
compensation  at  law  is  obtainable,  nevertheless,  even  if 
reasons  exist  for  refusing  that  remedy,  it  is  no  objection 
to  the  grant  of  injunction  where  the  equities  justify  it. 


394 


CHAPTER  XL 

SUBSTANTIAL  PERFORMANCE 

§281.    Perfonnance — Rule    Affecting    Substantial    Per- 
formance. 

Substantial  performance  of  a  contract  by  one  party- 
coupled  with  a  retention  of  benefits  by  the  other  will 
authorize  an  action  by  the  former  to  recover  the  contract 
price.  In  such  a  case  recovery  may  be  had  on  an  averment 
by  the  contractor  of  full  performance,  though  the  proof 
falls  short  of  showing  it,  and  the  remedy  of  the  public 
body  is  by  counterclaim  for  its  damages  or  by  an  inde- 
pendent action  before  it  is  sued  to  recover  such  damages 
as  it  has  sustained  through  the  contractor's  failure  to 
completely  fulfill  his  covenants.^  This  rule  is  founded  in 
justice,  for  if  one  party  has  received  the  benefit  of  sub- 
stantial performance  by  the  other,  without  paying  the 
price  agreed  upon  and  the  latter  cannot  or  does  not  return 
these  benefits,  it  would  be  manifestly  unjust  to  permit  him 
to  retain  them  without  paying  or  doing  as  he  promised. 
It  is  in  order  to  avoid  such  an  injustice  that  a  contractor 
who  has  substantially  performed  is  permitted  to  enforce 
specific  performance  of  the  covenants  of  the  public  body, 
or  to  recover  damages  for  their  breach  upon  an  averment 
of  performance  without  proof  of  complete  fulfillment.  ^    The 

1  Omaha  Water  Co.  v.  Omaha,  156  Fed.  922;  St.  Charles  v.  Stookey,  154 
Fed.  772;  Walsh  Const.  Co.  v.  Cleveland,  271  Fed.  701;  ^tna  Iron  Works  v. 
Kossuth  County,  79  Iowa,  40,  44  N.  W.  215;  White  v.  Braddock  Sch.  Dist.,  159 
Pa.  St.  201,  28  Atl.  136;  Sch.  Directors  v.  Roberson,  65  111.  App.  298. 

2  St.  Charles  v.  Stookey,  supra;  Newport  v.  Newport  B.  Co.,  90  Kv.  193.  la 
S.  W.  720. 

395 


§  281  ]  PERFORMANCE  AND  BREACH        [  PART  V 

foregoing  statement  of  principles  is  of  course  a  modem 
modification  of  the  common-law  rule  which  required  the 
express  stipulations  of  the  contract  to  be  strictly  performed 
and  admitted  of  no  recovery  for  substantial  compliance. 
This  rule,  however,  has  been  much  relaxed  and  the  modern 
tendency  is  not  to  require  in  all  cases  that  the  performance 
shall  be  Uteral  and  exact.  The  more  equitable  rule  stated 
has  been  generally  adopted  which  permits  recovery  by  one 
who  in  good  faith  attempts  to  perfonn  his  contract  and 
does  so  substantially  although  there  may  be  a  slight 
deviation,  or  some  technical  or  unimportant  omission  or 
defect.  But  a  failure  to  carry  out  a  material  part  of  the 
contract  is  not  a  substantial  performance,  and  at  least 
substantial  performance  is  still  indispensable  to  recovery 
under  the  modified  rule.  And  indeed  to  permit  a  recovery 
upon  the  theory  of  substantial  performance  even  de\'ia- 
tions  may  not  be  intentional.^  But  where  the  public  body 
can  refuse  to  accept  the  work  and  does  refuse  to  accept  it 
or  returns  it,  it  is  not  bound  to  pay  unless  it  exactly  con- 
forms with  the  contract.  It  is  only  where  contracts  for 
personal  services  or  construction  contracts  are  not  fully 
performed  but  the  public  body  accepts  the  fruits  of  the 
contract,  and  receives  and  retains  its  benefits  so  far  as  per- 
formed and  furnished  that  it  is  bound  to  pay  what  these 
are  reasonably  worth.  The  law  implies  a  promise  to  pay 
this  for  the  partial  performance  which  is  accepted.  This 
implied  liability  arises  from  the  subsequent  transactions  or 
conduct  of  the  parties,  and  if  the  party  for  whom  the  work 
was  done  does  not  intend  to  be  bound  by  it  as  performed, 

1  Denton  v.  Atchison,  34  Kan.  438,  8  Pac.  750;  Monteverde  v.  Bd.  of  Superv's 
Queens  County,  78  Hun,  267;  Smith  v.  Scott's  Ridge  Sch.  Dist.,  20  Conn.  312; 
Buckley  v.  Marin  County,  25  Col.  App.  577,  144  Pac.  545;  ^tna  Iron  Wks. 
V.  Ko.ssuth  County,  78  Iowa,  40,  44  N.  W.  215;  Filbert  v.  Philadelphia,  181 
Pa.  St.  530,  37  Atl.  545;  Cranford  v.  Dist.  of  Columbia,  20  Ct.  CI.  376. 

396 


CHAP.  XL  ]  SUBSTANTIAL   PERFORMANCE  [  §  281 

the  law  will  not  make  a  different  contract  for  him  than 
that  into  which  he  entered.     So  if  he  does  not  accept  the 
services  or  work  and  does  not  receive  or  retain  any  of  the 
benefits  this  imphed  liability  cannot  arise.  ^    A  contractor 
in  order  to  recover  must  honestly  and  in  good  faith  have 
endeavored  to  comply  with  the  terms  and  conditions  of  his 
contract. 2    The  substitution  of  material  one  fourth  in  wear- 
ing quahty  of  that  provided   by  contract  and  one-half  of 
the  dimension  required  cannot  be  considered  a  substantial 
compliance  or  an  inadvertent  or  unintentional  deviation. ^ 
This  is  so  because  the  term  substantial  performance  means 
strict  performance  in  all  essentials  necessary  to  the  full 
accomphshments  of  the  purposes  for  which  the  thing  con- 
tracted  for   was   designed.     Failure   as   to   any   of   such 
features  whether  in  good  faith  or  bad  faith,  any  departure 
from  the  contract  not  caused  by  inadvertence,  or  unavoid- 
able omission,  any  defect  so  essential  as  that  the  object 
which  the  parties  intended  to  accomplish  to  have  a  speci- 
fied amount  of  work  performed  in  a  particular  manner  is 
not  accomplished,  is  inconsistent  with  substantial  perform- 
ance of  the  contract.^    Substantial  performance  is  perform- 
ance with  inomaterial  omissions  for  which  compensation  is 
made  pro  tanto.    Omissions  which  relate  to  matters  so  essen- 
tial as  to  defeat  the  objects  of  the  parties  or  deviations  from 
the  plan  which  cannot  be  remedied  without  a  partial  recon- 
struction of  a  work  or  building  cannot  be  said  to  be  so  unsub- 
stantial as  to  be  capable  of  compensation,  without  injustice, 
by  deductions  from  the  price.    The  parties  are  bound  by  their 
agreement  and  cannot  escape  because  of  impossibility  to 

^  Denton  v.  Atchison,  supra. 

2  Buckley  v.  Marin  County,  supra;  Filbert  v.  Philadelphia,  supra. 

*  Denton  v.  Atchison,  supra. 

*  Manning  v.  Ft.  Atkinson  Sch.  Dist.,  124  Wis.  84,  102  N.  W.  356-  Smith  v 
RusseU,  140  N.  Y.  App.  Div.  102. 

397 


§  281  ]  PERFORMANCE   AND   BREACH  [  PART  V 

substantially  comply  with  its  terms.  When,  therefore,  the 
action  is  on  contract  and  not  for  quantum  meruit  recovery 
is  not  permitted  unless  a  substantial  performance  is  shown.  ^ 
Care  must  be  taken  to  not  unduly  extend  the  rule.  The 
Tule  is  Uberal  to  a  contractor  since  it  allows  recovery,  al- 
though perfonnance  is  not  exact,  and  it  cannot  be  extended 
without  danger  to  the  integrity  of  the  contract,  which  is 
and  should  be  the  measure  of  the  rights  of  the  parties.^ 
Otherwise  the  court  is  in  effect  making  a  new  contract  for 
them,  compelling  the  public  body  to  take  whatever  is 
tendered  as  performance  and  making  the  contractor  secure 
in  his  compensation  although  the  objects  of  the  contract 
are  not  accomplished  either  literally  or  substantially.  But 
the  rule  has  no  application  where  there  is  a  willful  and  in- 
tentional even  though  slight  departure  from  the  terms  of 
the  contract.^  The  question  whether  there  has  been  sub- 
stantial performance  of  a  contract  is  ordinarily  a  question 
of  fact  to  be  decided  by  a  jury."*  The  measure  of  recovery 
is  the  contract  price  less  the  damage  caused  by  failure  to 
strictly  perform.^ 

§  282.  Quantum  Meruit. 

If  a  contractor  substantially  performs  his  contract  recov- 
ery may  be  had  by  him  upon  the  contract,  as  shown,  upon 
an  allegation  of  performance  even  though  the  proof  falls 
short  of  it.    Under  the  same  equitable  rule  when  a  con- 

1  LitteU  V.  Webster  County,  152  Iowa,  206,  131  N.  W.  696;  McCain  v.  Dea 
Moines,  128  Iowa,  331,  103  N.  W.  979. 

2  Bigler  v.  New  York,  9  Hun,  253. 

3  Danville  Bridge  Co.  v.  Pomroy,  15  Pa.  St.  151;  Kelly  v.  Bradford,  33  Vt. 
35.    See  Bonesteel  v.  N.  Y.,  22  N.  Y.  165. 

*  Monteverde  v.  Queens  Co.,  78  Hun,  267;  Russell  v.  Iredell  County,  123 
N.  C.  264,  31  S.  E.  717;  Elizabeth  v.  Fitzgerald,  114  Fed.  547. 

5  ^tna  Iron  &  Steel  Wks.  v.  Kossuth  City,  79  Iowa,  40,  44  N.  W.  215; 
Walsh  Coast.  Co.  v.  Cleveland,  271  Fed.  701. 

398 


CHAP.  XL  ]  SUBSTANTIAL  PERFORMANCE  [  §  282 

tractor  in  good  faith  endeavors  to  perform  his  contract  he 
may  recover  upon  quantmn  meruit,  where  there  has  been  a 
substantial  compHance  with  the  terms  of  the  contract,  for 
the  value  of  the  benefits  conferred,  where  these  have  been, 
accepted  by  the  pubhc  body. 


999 


CHAPTER  XLI 

PERFORMANCE — DELAY  IN  PERFORMANCE 

I  283.  Performance — Time  of  Performance — Delay. 

Delay  and  time  necessarily  run  together,  and  consider- 
ation of  the  element  of  delay  brings  up  the  question  of  how- 
essential  the  element  of  time  is  in  the  contract.  Time  is 
not  generally  an  essential  element  of  contract,  and  where  it 
is  not  of  the  essence  of  the  contract,  a  mere  failure  to  per- 
form, within  the  period  specified,  will  not  avoid  the  agree- 
ment.^ A  contract  is  not  rendered  void  ab  initio  merely 
because  the  time  fixed  by  it  for  completion  of  the  work 
elapses  before  the  work  is  actually  commenced.^  If  time 
is  made  of  the  essence  of  a  contract  and  the  time  is  ex- 
ceeded and  the  work  not  finished,  no  recovery  may  be 
had.^  Time  is  of  the  essence  where  a  particular  ordinance 
which  provides  for  an  improvement  limits  the  time  for 
completion  or  a  general  ordinance  exists  which  requires 
w^ork  to  be  done  within  the  agreed  time.^  But  if  the  con- 
tract provides  for  liquidated  damages  in  case  the  work  or 
structure  is  not  completed  in  time,  this  renders  the  con- 
tract indefinite  as  to  time  and  time  will  not  be  considered 
of  the  essence.^  Where  the  public  body  is  the  cause  of  the 
delay,  the  contractor  is  not  obliged  to  abandon  the  work 

1  Baltimore  v.  Raymo,  68  Md.  569,  13  Atl.  383. 

2  Idem. 

^  Baltimore  v.  Raymo,  68  Md.  569,  13  Atl.  383;  Garland  v.  New  Orleans, 
13  La.  Ann.  43;  Wheless  v.  St.  Louis,  90  Mo.  App.  106;  Chandley  v.  Cambridge 
Springs,  203  Pa.  St.  139,  52  Atl.  87. 

*  Springfield  v.  Schmook,  120  Mo.  App.  41,  96  S.  W.  257  and  cases  cited. 

5  Heman  v.  GUUam,  171  Mo.  258,  71  S.  W.  163. 

400 


CHAP.  XLI  ]  DELAY   IN  PERFORMANCE  [  §  283 

and  bring  suit  for  damages,  but  may  complete  the  work 
and  then  bring  action.'  If  the  contractor  delays  because  a  pub- 
lic body  has  not  sold  bonds,  he  is  responsible,  as  he  cannot  put 
any  blame  upon  the  public  body  for  not  having  funds  in  its 
treasury  in  advance  of  the  time  it  is  due  to  him.  Wliere,  how- 
ever, the  delay  is  caused  by  the  failure  of  the  pubhc  body  to 
make  payments,  the  contractor  is  reUeved  of  responsibiUty 
therefor.2  Where  the  public  body  is  at  fault  for  delays, 
it  cannot  hold  the  contractor  liable  in  the  amount  of  stipu- 
lated damages  for  any  delays  which  have  been  due  to  its 
fault,  or  to  the  fault  of  persons  for  whose  conduct  the  pub- 
He  body  is  responsible.^  But  where  the  responsibility  of 
the  contractor  and  the  public  body  for  delays  is  capable  of 
apportionment,  each  must  bear  the  responsibiUty  for  his 
own  delays."*  If  the  public  body  is  principally  at  fault  and 
it  is  impossible  to  apportion  the  responsibility  between  it 
and  the  contractor,  the  contractor  is  relieved  entirely  and 
the  stipulated  damage  clause  becomes  abrogated.^  In- 
stances arise  where  the  public  body  agrees  to  afford  full 
opportunity  to  commence  and  prosecute  the  work.  Until 
this  condition  precedent  to  performance  is  fulfilled  the  con- 
tractor's agreement  as  to  time  does  not  accrue.^  So  where 
the  pubhc  body  postpones  commencing  the  work  to  a  more 
unfavorable  season  of  the  year,  and  the  situation  of  the 
parties  is  so  changed  that  they  could  not  have  intended  the 
stipulation  as  to  time  to  remain  in  force,  no  responsibility 

1  Chickasha  v.  Hollingsworth,  155  Pac.  (Okla.)  859. 

2  Chandley  v.  Cambridge  Springs,  supra. 

3  Wallis  V.  Wenham,  204  Mass.  83,  90  N.  E.  396;  Amoskeag  Mfg.  Co.  v. 
U.  S.,  17  Wall.  (U.  S.)  592,  21  L.  Ed.  715;  Erickson  v.  U.  S.,  107  Fed.  204; 
Dist.  of  Columbia  v.  Camden  Iron  Wks.,  15  App.  D.  C.  198. 

*  Wallis  V.  Wenham,  supra;  Chandley  v.  Cambridge  Springs,  supra;  Contra, 
Mosler  Safe  Co.  v.  Maiden  Lane  S.  D.  Co.,  199  N.  Y.  479,  93  N.  E.  81. 

5  Wallis  V.  Wenham,  supra;  Deeves  v.  New  York,  17  N.  Y.  Supp.  460;  Long 
V.  Pierce  County,  22  Wash.  330,  61  Pac.  142. 

^  Idem. 

401 


§  283  ]  PERFORMANCE  AND   BREACH  [  PART  V 

for  stipulated  damages  can  rest  upon  the  contractor.^ 
To  the  extent  that  the  public  body  delays  the  work,  the 
parties  are  taken  to  have  understood  and  intended  that  the 
time  limit  for  completion  is  extended  by  the  amount  of 
such  delays.^  In  some  jurisdictions  it  is  declared,  where 
acts  of  the  public  body  cause  delay,  that  this  abrogates  the 
stipulated  damage  clause  and  leaves  the  contractor  respons- 
ible only  for  actual  damages.^  And  it  is  also  denied  that 
there  can  be  any  apportionment  of  fault,  or  of  the  delays 
caused  by  mutual  default.^ 

Damages  may  be  recovered  for  imreasonable  delay  on 
the  part  of  the  pubhc  body  in  allowing  the  contractor  to 
proceed,  for  delay  in  performing  conditions  precedent  to  his 
duty  to  proceed,  or  for  unreasonable  interference  with  the 
contract  work  or  with  other  contractors  over  whom  control 
has  been  reserved.^ 

Delay  in  performance  sometimes  occasions  increased 
cost  in  the  price  of  labor  and  materials,  and  when  a  con- 
tractor does  not  complete  he  is  left  without  compensation 
for  his  own  time  and  services  and  for  the  use  of  his  plant 
upon  the  contract  work  which  he  would  usually  receive  in 
the  shape  of  profits.  Where  these  results  ensue  from  delay 
caused  by  the  public  body  without  right  the  contractor  is 

'  Wallis  V.  Wenham,  supra;  King  Iron  B.  &.  Mfg,  Co.  v.  St.  Louis,  43  Fed. 
768. 

2  White  V.  Braddock  Sch.  Dist.,  159  Pa.  St.  201,  28  Atl.  136;  Chicago,  B.  & 
I.  Co.  V.  Olson,  80  Utah,  533,  83  N.  W.  461;  Wallis  v.  Wenham,  supra;  Callahan 
Cons.  Co.  V.  U.  S.,  47  Ct.  CI.  229. 

'  McClintic  Marshall  C.  Co.  v.  Bd.  of  Chosen  Freeholders,  83  N.  J.  Eq. 
539,  91  Atl.  881;  U.  S.  v.  United  Eng.  Co.,  234  U.  S.  236,  58  L.  Ed.  1294, 
aff 'g  47  Ct.  CI.  489;  Mosler  Safe  Co.  v.  Maiden  Lane  Safe  D.  Co.,  199  N.  Y.  479, 
93  N.  E.  81. 

*  Mosler  Safe  Co.  v.  Maiden  Lane  S.  D.  Co.,  supra.  See  Delafield  v.  West- 
field,  41  N.  Y.  App.  Div.  24,  169  N.  Y.  582,  62  N.  E.  1095. 

5  McMaster  v.  New  York,  108  N.  Y.  542,  15  N.  E.  417;  Thilemann  v.  New 
York,  82  N.  Y.  App.  Div.  136;  Rogers «;.  New  York,  71  Id.  618,  aff'd.  173  N.  Y. 
623,  66  N.  E.  1115;  Lentilhon  v.  New  York,  102  N.  Y.  App.  Div.  548,  185 
N.  Y.  549,  77  N.  E.  1190. 

402 


CHAP.  XLI  ]  DELAY   IN   PERFORMANCE  [  §  284 

entitled  to  sue  and  recover  these  damages.  Accordingly  if 
in  fact  the  cost  of  labor  and  material  has  risen,  this  is  a 
recoverable  item.^  The  value  of  his  services  and  his  time 
upon  the  work  may  also  be  recovered. ^  Where  he  has 
employees  whom  he  must  keep  upon  salary  during  this 
period  he  may  hkewise  recover  such  amounts  as  he  expends, 
and  the  value  of  the  use  of  his  plant  and  machinery  is  also 
considered  a  loss  which  may  be  recovered.^  He  must, 
however,  allow  for  any  compensation  actually  received 
during  this  period  for  their  services  from  other  sources.'* 
But  where  the  contractor  subsequently  completes  perform- 
ance he  may  not  recover  for  his  own  time  and  services 
since  he  will  find  such  compensation  in  his  profits.^ 
Where  of  course  the  pubhc  body  under  a  reserved  power  or 
otherwise  rightfully  delays  the  work,  no  recovery  may  be 
had  for  such  delay .^ 

§  284.  Varying  Causes. 

Where  delay  is  occasioned  in  the  performance  of  work 
upon  a  public  building,  because  another  contractor  doing 
special  work  in  the  building  had  not  finished  his  work  on 
time,  the  contractor  for  the  building  may  not  claim  dam- 
ages against  the  public  body  if  his  failure  to  have  his  work 
ready  on  time  delayed  the  other  contractor.'^  But  where 
the  delay  is  the  delay  of  the  public  body  or  its  architect  or 
agent,  because  it  fails  to  do  the  things  which  under  the 

1  King  V.  Des  Moines,  99  Iowa,  432,  68  N.  W.  708;  AUamon  v.  Albany,  43 
Barb.  33;  Kelly  v.  U.  S.,  31  Ct.  CI.  231;  Bitting  v.  U.S., 25  Ct.  CI.  502;  Lang- 
ford  V.  U.  S.,  95  Fed.  933. 

2  KeUy  V.  U.  S.,  31  Ct.  CI.  361. 

3  Chickasha  v.  Hollingsworth,  56  Okla.  341,  155  Pac.  859;  Cotton  v.  U.  S., 
38  Ct    CI    36. 

4  Cotton  V.  U.  S.  supra.    See  Figh  v.  U.  S.  8  Ct.  CI.  319. 

5  Langford  v.  U.  S.  supra. 

« Cumberland  Co.  Bd.  v.  Poxson  Co.,  196  Fed.  156,  201  Fed.  656. 
7  Churchyard  v.  U.  S.  100  Fed.  920. 

403 


§  284  ]         PERFORMANCE  AND  BREACH        [  PART  V 

contract  it  was  obliged  to  do,  it  is  liable.^  Where  several 
contracts  are  made  with  a  contractor  each  of  which  pro- 
\ided  the  pubHc  body  would  require  completion  in  a  cer- 
tain time  after  a  designation  of  the  day  and  place  of 
commencing  each  contract,  and  the  public  body  fails  to 
give  the  notice,  no  liability  for  delay  will  arise.-  Where  a 
public  body  delays  and  suspends  work  because  of  contem- 
plated changes  of  purpose  in  regard  to  the  use  of  stone  and 
the  site,  the  enforced  suspensions  and  delays  are  unjustifi- 
able and  are  not  covered  by  a  stipulation  that  the  stone 
shall  be  furnished  as  ''required."^  But  a  contractor  can- 
not complain  of  delays  which  occur  in  the  completion  of 
work  when  the  delay  is  occasioned  by  the  exercise  of  a 
power  which  the  contract  warrants.'*  A  provision  that  a 
contractor  shall  stand  loss  from  unforeseen  obstructions  or 
difficulties  encountered  in  the  work  will  not  be  extended  to 
apply  to  obstructions  and  difficulties  at  a  changed  place  of 
work,  resulting  from  increased  depth  of  water  and  quick- 
sand.^ Loss  from  delays  caused  by  failure  to  deliver  pipes 
which  is  cast  upon  the  contractor  will  not  include  defects 
in  them  which  cannot  be  discovered  until  they  are  being 
put  in  place.^ 

§  285.  Rejection  of  Materials. 

Provisions  in  a  contract,  which  name  an  inspector  to 
see  that  the  work  corresponded  with  plans  and  specifica- 
tions,  and  make  his  certificate  that  the  work  has  been 

1  W.  G.  Cornell  Co.  v.  Schuylkill  County,  222  Fed.  876;  United  States  v. 
United  Eng.  Co.,  234  U.  S.  23G,  58  L.  Ed.  1294,  aff'g  47  Ct.  CI.  489;  U.  S.  v. 
Smith,  256  U.  S.  11,  aff'g  54  Ct.  CI.  119. 

2  McClintic  Marshall  C.  Co.  v.  Bd.  of  Freeholders,  83  N.  J.  Eq.  539,  91 
Atl.  881. 

»  U.  S.  V.  Mueller,  113  U.  S.  153,  28  L.  Ed.  946,  aff'g  19  Ct.  CI.  581. 
*  Montgomery  v.  Mayor,  151  N.  Y.  249,  45  N.  E.  550. 
5  Wood  V.  Ft.  Wayne,  119  U.  S.  312,  30  L.  Ed.  416. 
'  Idem. 

404 


CHAP.  XLI  ]  DELAY   IN    PERFORMANCE  [  §  286 

faithfully  performed  in  accordance  with  the  contract  a 
condition  precedent  to  payment,  in  effect  constitute  him  a 
judge  as  to  these  matters.  If  he  arbitrarily  rejects  mate- 
rials and  thereby  causes  delay  to  the  contractor  the  latter's 
remedy  is  to  disregard  his  rejections,  go  on  with  the  work 
and  rely  on  the  fact  that  the  work  done  and  materials  fur- 
nished are  up  to  the  requirement  of  the  contract,  should 
the  public  body  refuse  payment.  The  contractor  cannot 
if  he  acquiesces  in  the  inspector's  rejection  of  materials  and 
procures  other  materials,  maintain  an  action  against  the 
public  body  for  damages,  where  the  execution  of  the  work 
is  thus  delayed,  on  the  ground  that  the  delay  was  caused 
by  such  officers.  For  by  force  of  the  contract  these  officers 
were  invested  with  the  power  of  supervision  and  an  action 
will  not  He,  especially  when  the  delay  is  occasioned  in  the 
exercise  of  this  very  power  of  supervision  which  the  con- 
tract warrants  and  which  the  contractor  seems  to  recog- 
nize.^ To  protect  himself  the  contractor  must  stand  upon 
his  own  rights  imder  the  contract. 

§  286,  Waiver. 

When  the  contract  provides  for  stipulated  damages  for 
each  day  the  completion  of  the  work  is  delayed  beyond  the 
time  fixed,  there  is  no  waiver  of  the  time  of  performance 
because  a  pubhc  body  prevents  a  contractor  from  continu- 
ing work  after  the  time  for  completion  has  expired.  The 
very  purpose  of  the  provision  is  to  prevent  any  question 
on  this  subject.  This  is  especially  true  where  the  contract 
provides  that  acceptance  of  any  part  of  the  work  shall  not 
be  deemed  a  waiver  of  the  right  to  enforce  the  provisions 

» Montgomery  &  Mayor,  151  N.  Y.  249,  45  N.  E.  550,  aff'g  9  Misc.  331; 
Camden  I.  Wks.  v.  New  York,  104  N.  Y.  App.  Div.  272,  modified  185  N.  Y. 
617,  78  N.  E.  1101. 

405 


§  286  ]  PERFORMANCE  AND   BREACH  [  PART  V 

of  the  contract.^  Making  a  part  payment  of  the  amount 
due  after  the  time  specified  for  the  completion  of  the  build- 
ing, is  not  inconsistent  with  a  claim  for  damages  on  ac- 
count of  delay  in  completion  where  enough  is  retained  to 
cover  the  damages  claimed  on  that  account  by  the  public 
body.-  Waiver  of  performance  of  the  contractor's  agree- 
ment as  to  time  of  completion  and  payment  after  such  time 
do  not  constitute  waiver  of  a  provision  for  stipulated 
damages.^  Of  course  a  public  body  may  waive  its  claim 
for  damages  on  account  of  delays  of  the  contractor.^ 
Strict  performance  of  the  element  of  time  may  be  waived 
and  it  is  waived  where  the  public  body  urges  a  contractor 
to  go  on  with  the  work  after  the  contract  time  has  expired 
and  makes  part  payment.^  Thereafter  the  pubHc  body 
may  only  claim  such  damages  as  it  may  suffer  by  reason  of 
the  delay.  Where  the  time  to  complete  is  expressly  ex- 
tended and  the  contractor  does  not  complete  the  work  or 
deliver  the  goods  within  the  extended  time,  he  will  be  held 
to  the  full  obligation  of  the  contract  for  any  delay  beyond 
the  extension.^  Where  the  pubUc  body  reserves  the  right 
to  increase  the  height  of  a  building  but  fails  to  ask  that 
this  be  done  until  the  time  for  entire  completion  had  so 
nearly  expired  that  this  work  could  not  be  done  in  time, 
the  provision  for  Uquidated  damages  for  failure  to  complete 
in  time  is  waived.' 

1  Macey  Co.  v.  New  York,  144  N.  Y.  App.  Div.,  408,  208  N.  Y.  514,  101 
N.  E.  1110. 

2  Lawrence  County  v.  Stewart,  72  Ark.  525,  81  S.  W.  1059;  Stephens  v. 
Essex  County  Pk.  Comm.,  143  Fed.  844. 

*  Stephens  v.  Essex  County  Pk.  Comm.,  supra. 

*  Rosser  v.  U.  S.,  46  Ct.  CI.  192. 

5  Phillips  Cons.  Co.  v.  Seymour,  91  U.  S.  46,  23  L.  Ed.  341. 

«  Laidlaw  D.  G.  Co.  v.  U.  S.,  47  Ct.  CI.  271. 

^  Maurer  v.  Sch.  Dist.,  186  Mich.  223,  152  N.  W.  999. 


406 


CHAPTER  XLII 

DEFECTS  IN  PERFORMANCE 

§  287.  Defects  in  Performance. 

Defects  like  delays  have  numerous  causes,  and  liability 
for  defects  depends  upon  responsibility  for  these  varying 
causes,  upon  the  acts  of  each  party  which  proximately 
produced  them.  The  defect  may  be  caused  by  the  public 
body  in  furnishing  improper,  insufficient  or  defective 
plans.  ^  It  may  furnish  defective  materials,  or  allow  work 
done  to  become  defective  by  providing  in  the  contract 
improper  or  insufficient  means  for  its  protection,  but  if 
those  provided  are  followed  the  contractor  is  reUeved.^ 
In  such  cases  the  pubUc  body  is  chargeable  with  resulting 
defects  and  cannot  shift  the  risk  to  the  contractor.  The 
contractor  may  not  properly  be  held  responsible  when  later 
a  bridge  collapses,^  because  of  defects  in  the  plans  fur- 
nished, or  mortar  or  concrete  disintegrates  because  directed 
to  be  laid  in  freezing  weather  ^  or  a  building  falls  because 
materials  were  unsuitable  or  defective.^  So  where  work 
already  exists  to  which  new  work  or  structures  are  to  be 
added  the  contractor  cannot  be  held  responsible  because 
the  public  body  fails  to  remove  defective  work.    If  founda- 

1  Hills  V.  Farmington,  70  Conn,  450,  39  Atl.  795;  Indep.  Sch.  Dist.  v.  Sweam- 
gin,  119  Iowa  702,  94  N.  W.  206;  Bd.  of  Comm.  Carroll  County  v.  O'Connor, 
137  Ind.  622,  35  N.  E.  1006;  Dwyer  v.  New  York,  77  N.  Y.  App.  Div.  224; 
MacKnight  Flintic  Stone  Co.  v.  New  York,  160  N.  Y.  72,  54  N.  E.  661;  Dist. 
Columbia  v.  Clephane,  13  D.  C.  155,  110  U.  S.  212,  28  L.  Ed.  122;  Dale  v. 
U.  S.,  14  Ct.  CI.  514;  Penn.  Bridge  Co.  v.  New  Orleans,  222  Fed.  737.  See 
Kinser  v.  State,  125  N.  Y.  Supp.  46,  145  N.  Y.  App.  Div.  41,  204  N.  Y.  381, 
97  N.  E.  871. 

2  Schliess  v.  Grand  Rapids,  131  Mich.  52,  90  N.  W.  700. 
'  Penn.  Bridge  Co.  v.  New  Orleans,  supra. 

*  Schliess  v.  Grand  Rapids,  supra. 

6  Manville  v.  McCoy,  3  Ind.  148;  Bentley  v.  State,  73  Wis.  416, 41  N.  W.  338. 

407 


§  287  ]  PERFORMANCE   AND   BREACH  [  PART  V 

tions  left  prove  insufficient  the  contractor  is  relieved.^ 
If  a  bridge  proves  an  utter  failure,  because  the  public 
authorities  insisted  upon  the  use  of  old  material  in  a  bridge 
and  would  not  consider  plans  which  did  not  include  its  use, 
it  matters  not  that  the  contractor  drew  the  plans,  where 
the  public  body  limited  his  manner  of  drawing  them  and 
then  adopted  them  as  their  own  in  an  attempt  to  get  other 
bridge  builders  to  bid  for  the  work.  Under  such  circum- 
stances the  public  body  is  responsible.^  Where  of  course  a 
building  or  structure  collapses  without  fault  of  the  public 
body  but  because  of  defective  work  done  by  the  contractor 
or  defects  in  the  plans  w^hich  he  has  adopted  as  sufficient, 
the  contractor  wdll  be  responsible.^  If  the  contractor  fails 
to  perform  his  work  m  accordance  with  specifications  the 
public  body  is  not  obligated  to  accept  the  work,  and  upon 
refusal  is  not  even  liable  upon  a  quantum  meruit.  The 
public  body  may  likewise  refuse  to  accept  defective  per- 
formance, and  no  hability  either  upon  the  contract  or  upon 
quantum  meruit  can  arise  against  it.^ 

The  damages  recoverable  for  defective  performance  con- 
sist of  the  difference  in  value  between  what  is  tendered  as 
performance  and  what  is  due  and  required  by  the  terms  of 
the  contract.^  If  the  contractor  is  justified  in  abandoning 
the  work  the  pubUc  body  may  not  recover  any  damages 
for  his  failure  to  fully  perform.^ 

1  Gibbons  v.  U.  S.  15  Ct.  CI.  174,  aff'd  109  U.  S.  200,  27  L.  Ed.  906. 

2  Holland  v.  Union  County,  68  Iowa,  56,  25  N.  W.  927. 

'  Lake  View  v.  MacRitchie,  134  111.  203,  25  N.  E.  663;  Shoenberger  v.  Elgin, 
164  111.  80,  45  N.  E.  434.  See  Thorn  v.  Mayor,  L.  R.  1  App.  Cas.  120,  aff'g  44 
L.  J.  Exch.  62;  DeMoth  &  Rose  v.  Hillsboro  Indep.  Sch.  Dist.,  186  S.  W. 
(Tex.  C.  A.,)  437. 

*  Bonesteel  v.  New  York,  22  N.  Y.  162;  Denton  v.  Atcheson,  34  Kan.  438, 
8  Pac.  750. 

'  Converse  Br.  Co.  v.  Geneva  County,  168  Ala.  432,  53  So.  196;  Wiley  v. 
Athol,  150  Mass.  426,  23  N.  E.  311,  6  L.  R.  A.  342. 

"  San  Francisco  Bridge  Co.  v.  Dumbarton  L.  Co.,  119  Cal.  272,  51  Pac.  335. 

408 


CHAPTER   XLIII 

PERFORMANCE — EXCUSE     FOR    NON-PERFORMANCE — IM- 
POSSIBILITY  OF   PERFORMANCE 

§  288.  Impossibility  of  Performance — Unforeseen  Condi- 
tions. 
Where  an  executory  contract  is  made  wherein  a  con- 
tractor absolutely  agrees  to  perform  some  act  which  is 
possible  in  itself,  he  is  not  excused  if  he  is  unable  to  exe- 
cute it  through  unforeseen  conditions,  accident  or  mis- 
fortune, but  he  must  perform  or  pay  damages.^  The  only 
way  he  can  protect  himself  is  by  appropriate  stipulations 
in  his  contract  against  these  contingencies.^  There  are, 
however  in  the  nature  of  many  contracts  implied  condi- 
tions by  which  a  contractor  is  relieved  from  his  unqualified 
obligation  because  the  law  at  its  making  has  qualified  it. 
And,  when  in  such  event,  without  his  fault,  performance 
is  rendered  impossible,  it  may  be  excused.^  When  it  is 
inherently  known  to  and  contemplated  by  the  parties  at 
its  making  that  the  fulfillment  of  the  contract  is  dependent 
upon  the  continuance  or  existence  of  certain  things  or 
conditions  essential  to  its  due  execution,  if  before  default 
they  cease  to  exist  and  thereby,  without  fault,  performance 
becomes  impossible,  the  contractor  is  relieved  from  the 
consequences  of  his  failure  to  perform,  by  virtue  of  this 
implied  condition,  to  which  his  contract  is  made  subject 

1  Kinser  Cons.  Co.  v.  State,  125  N.  Y.  Supp.  46,  145  App.  Div.  41,  204  N.  Y. 
381,  97  N.  E.  871;  Jones  v.  U.  S.,  96  U.  S.  24,  24  L.  Ed.  644,  aff'g  11  Ct.  CI.  733. 

2  Kinser  Cons.  Co.  v.  State,  supra;  Jones  v.  U.  S.,  supra. 

3  Kinser  Cons.  Co.  v.  State,  supra. 

409 


§  288  ]  PERFORMANCE  AND  BREACH        [  PART  V 

by  force  of  law.^     It  is  because  the  parties  intended  the 
exception  that  the  law  miplies  the  condition. 

There  are  accordingly  many  exceptions  to  the  rule 
that  accident  or  unforeseen  conditions,  arising  without 
the  fault  of  either  party,  will  not  excuse  performance  of 
an  absolute  executory  contract.  Four  have  been  stated 
to  be  the  quantum  of  exceptions.^  But  a  fifth  at  least 
should  be  added.^  These  exceptions  are  as  follows: 
1.  Where  performance  of  the  contract  is  absolutely  im- 
possible. 2.  Where  it  becomes  legally  impossible.  3. 
T\'Tiere  the  specific  thing  which  is  essential  to  the  perform- 
ance of  the  contract  is  destroyed.  4.  Where  through 
sickness  or  death  personal  services  become  impossible. 
5.  WTiere  conditions  essential  to  performance  do  not  exist. 

§  289.  Where  Performance  is  Absolutely  Impossible. 

It  is  a  truism  that  impossible  conditions  cannot  be 
performed.  A  contract  requiring  the  performance  of  these 
contradicts  itself.  If  therefore  a  person  contracts  to  do 
something  absolute^  impossible  at  the  time,  not  sub- 
sequently, the  contract  will  have  no  binding  force,  because 
no  man  can  be  obliged  to  perform  an  impossibility.^  It 
is  only  where  the  thing  is  possible  in  itself  and  the  party 
absolutely  engages  to  perform  it,  that  performance  will 
not  be  excused  by  the  occurrence  of  inevitable  accident  or 
other  contingency  or  difficulty,  although  it  was  not  fore- 
seen by  the  party  and  was  beyond  his  control.^  But  the 
impossibility  which  releases  a  contractor  from  the  obliga- 

»  Kinser  v.  State  (N.Y.  Ct.  CI.)  125  N.  Y.  Supp.  46. 
^  Idem. 

'  Jones  V.  U.  S.,  supra. 

« Jones  V.  U.  S.,  96  U.  S.  24,  24  L.  Ed.  644,  aff'g  11  Ct.  CI.  733;  Cameron- 
Hawn  Realty  Co.  t;.  Albany,  207  N.  Y.  377,  101  N.  E.  162. 
^  Jones  V.  U.  S.,  supra. 

410 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  291 

tion  to  perform  his  contract  must  be  a  real  impossibility 
and  not  a  mere  inconvenience.^ 

§  290.  Where  Legal  Impossibility  Arises — General  Rule. 
Where  the  performance  of  a  contract  which  was  lawful 
in  its  inception  becomes  unlawful  or  legally  impossible  of 
performance  by  reason  of  any  subsequent  act  or  event, 
the  contract  is  thereby  dissolved  or  terminated,  in  so  far  as 
it  remains  executory,  and  both  parties  are  excused  from 
its  further  performance.^ 

§  291.  Legal  Impossibility — Operation  of  Law — Frustration 
of  Objects. 
Where  a  contract  for  public  work  provides  that  the 
contract  price  is  not  to  be  paid  until  the  final  completion 
of  the  work  and  after  part  performance  further  execution 
becomes  impossible  by  the  act  of  the  law,  the  performance 
of  the  required  condition  becomes  ineffective  and  the 
contractor  is  entitled  to  recover  without  showing  a  com- 
pliance in  this  regard.^  Where  a  contractor  with  the 
State  sublet  a  part  of  his  work  and  subsequently  when  the 
work  was  partly  performed  the  contractor  was  prevented 
by  authority  of  the  State,  through  the  passage  of  a  statute 
from  completing  performance,  the  subcontractor  may  only 
recover  under  the  contract  for  the  work  done.^  But 
neither  the  contractor  nor  the  subcontractor  can  claim 
loss  of  profits  against  the  other,  since  neither  party  is  at 
fault  and  there  is  no  breach  of  the  agreement  by  either 
party.  ^    But  where  the  performance  by  the  contractor  is 

1  Smoot's  Case,  82  U.  S.  (15  Wall.)  36,  21  L.  Ed.  107. 

2  Brick  Presb.  Church  v.  New  York,  5  Cow.  538;  Jones  v.  Judd,  4  N.  Y.  411; 
U.  S.  V.  Dietrich,  126  Fed.  671;  Anglesea  v.  Rugeley,  6  Q.  B.  107,  114;  Brew- 
ster V.  Kitchin,  1  Ld.  Ray,  317,  321. 

3  Jones  V.  Judd,  4  N.  Y.  411. 
^  Idem. 

«  Jones  V.  Judd,  4  N.  Y.  411;  Devlin  v.  New  York,  63  N.  Y.  8. 

411 


§  291  ]  PERFORMANCE   AND   BREACH  [  PART  V 

prevented  by  the  act  or  omission  of  the  pubUc  body  he 
has  his  election  to  treat  the  contract  as  rescinded  and 
recover  on  quantum  meruit,  for  the  value  of  his  labor  and 
materials  furnished,  or  he  may  sue  upon  the  contract  and 
recover  for  the  work  completed  according  to  the  contract 
and  for  loss  in  profits,  or  otherwise  which  he  sustained.^ 
Where  a  contract  was  made  by  the  United  States  with  a 
contractor  who  later  became  a  member  of  Congress,  his 
position  as  a  public  official  immediately  terminated  the 
contract  as  partly  performed,  by  virtue  of  section  3739 
of  the  Revised  Statutes,  which  became  a  part  of  the 
contract  at  the  time  it  was  made,  and  dissolved  it  when 
he  became  an  officer  of  the  government  authorized  to 
make  contracts.^  This  rule  that  where  a  contract  becomes 
impossible  of  performance  by  operation  of  law,  perform- 
ance is  excused,  is  based  upon  an  implied  condition  of  the 
contract.  So  whether  the  illegal  situation  is  forced  into  a 
contract  by  act  of  the  legislature  making  further  perform- 
ance illegal,  or  by  act  of  a  court  through  process  of  in- 
junction or  otherwise,  the  result  is  the  same.^ 

Where  an  act  or  thing  contracted  to  be  done  is  sub- 
sequently made  unlawful  by  act  of  the  legislature,  the 
promise  is  avoided.  And  where  performance  depends  upon 
the  continued  existence  of  a  thing  which  is  assumed  as  a 
basis  of  the  agreement,  the  destruction  of  the  thing  by  the 
enactment    of    a    law    terminates    the    obligation.*      But, 

1  Danolds  v.  State,  89  N.  Y.  36;  Lord  v.  Thomas,  64  N.  Y.  107;  Jones  v. 
Judd,  4  N.  Y.  411. 

2  U.  S.  t;.  Dietrich,  126  Fed.  671. 

'Advertiser  Co.  v.  State,  193  Ala.  418,  69  So.  501;  Burkhardt  v.  Georgia 
Sch.  Tp.,  9  S.  D.  315,  69  N.  W.  16;  Jones  v.  Judd,  suj/ra-  See  Webb  Granite 
&  Cons.  Co.  V.  Worcester,  187  Mass.  385,  73  N.  E.  639.  See  Wade  v.  Brant- 
ford,  19  U.  C.  Q.  B.  207. 

*  Advertiser  Co.  v.  State,  supra;  Monaca  v,  Monaca  St.  Ry.  Co.,  247  Pa.  St. 
242,  93  Atl.  344. 

412 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  291 

because  the  public  body  happens  to  be  a  party  to  a  con- 
tract, it  does  not  surrender  its  sovereign  right  and  duty  to 
legislate,  and  therefore  the  passage  of  a  general  law  which 
affects  the  contractor  and  the  general  public  equally  is  not 
a  breach  and  will  not  relieve  from  performance.^  The 
adoption  of  new  rules  governing  the  inspection  and  ac- 
ceptance of  work  or  supplies  or  goods  purchased,  so  long 
as  they  are  reasonable  and  intended  to  prevent  frauds, 
which  were  constantly  perpetrated,  do  not  constitute  a 
breach  or  excuse  performance.^ 

The  law  of  the  land  constitutes  a  part  of  every  contract. 
When  performance  of  a  contract  becomes  impossible  non- 
performance is  excused  by  reason  of  an  implied  condition 
of  the  contract.  Where  the  legal  impossibility  arises  by 
operation  of  law  from  the  exercise  of  a  power  conferred 
upon  a  public  body  or  one  of  its  boards  or  agents,  non- 
performance is  excused.  Thus  when  the  performance  of  a 
contract  of  employment  as  a  teacher  becomes  impossible 
by  reason  of  the  exercise  of  a  power  conferred  upon  health 
authorities  to  close  a  school  to  prevent  an  epidemic,  the 
contract  becomes  unenforceable  and  no  recovery  may  be 
had  by  such  teacher  during  the  period  of  suspension.'' 
If,  however,  a  school  house  is  burned  down  the  obhgation 
to  teach  continues,  since  another  place  to  hold  school  may 
be  obtained,  and  so  the  public  obligation  to  pay  survives.^ 

Where  the  construction  of  a  reservoir  contract  was 
suspended  under  the  Defense  of  the  Realm  Act  which 
made   it   illegal   to   continue,    the   performance   was   thus 

1  Denning  v.  U.  S.,  1  Ct.  CI.  190;  Jones  v.  U.  S.,  1  Ct.  CI.  383. 

2  U.  S.  V.  Wormer,  13  Wall.  25;  Smoot's  Case,  82  U.  S.  (15  WaU.)  36,  21  L. 
Ed.  107. 

»  Gregg  School  Tp.  v.  Hinshaw, Ind.  App. ,  132  N.  E.  586. 

^  Smith  V.  Pleasant  PI.  Sch.  Dist.,  69  Mich.  589,  37  N.  W.  567;  Cashen  v. 
Sch.  Dist.,  50  Vt.  30. 

413 


§  291  ]  PERFORMANCE   AND    BREACH  [  PART  V 

rendered  illegal  and  the  object  of  the  contract  frustrated 
by  an  interruption  which  changed  its  conditions  vitally 
and  fundamentally  and  so  the  contract  became  deter- 
mined.^ 

§  292.  Act  of  God — Inevitable  Necessity. 

WTiere  an  obligation  or  duty  is  imposed  upon  a  person 
by  law,  he  is  absolved  from  liability  for  non-performance 
of  the  obligation  if  his  performance  is  rendered  impossible 
^*ithout  his  fault  by  an  act  of  God  or  an  unavoidable 
accident,  sometimes  alluded  to  as  inevitable  necessity. 

This  rule  does  not  generally  apply  to  contract  obliga- 
tions.  The  general  rule  as  to  these  is  that  a  contractor, 
who  makes  an  absolute  agreement  to  do  a  lawful  act,  is 
not  relieved  from  liability  for  a  failure  to  fulfill  his  promise 
by  a  subsequent  impossibility  of  performance  caused  by 
an  act  of  God  or  unavoidable  accident.  The  reason  for 
the  rule  is  that  he  voluntarily  agrees  to  perform  the  act 
without  any  reservation  or  exception,  which  if  he  desired, 
he  could  make  in  his  agreement.-  Nevertheless,  as  said 
above,  when  it  is  the  law  that  creates  the  duty  or  charge 
and  the  party  is  imable  to  perform  it  without  default  on 
his  part,  the  law  excuses.  The  law  never  exacts  perform- 
ance, w^here  it  will   involve   a   violation  of  law.    Against 

1  MetropoUtan  Water  Bd.  v.  Dick,  87  L.  J.  K.  B.  370,  aff'g  86  L.  J.  K.  B.  675. 
See  Leiston  Gas  Co.  v.  Leiston-Cum-Sizewell  Urban  Council,  85  L.  J.  K.  B. 
1759. 

2  School  Dist.  V.  Dauchy,  25  Conn.  530,  68  Am.  Dec.  371;  Dewey  v.  Alpena 
Sch.  DLst.  43  Mich.  480,  5  N.  W.  646,  38  Am.  R.  206;  Cameron-Hawn  Realty 
Co.  V.  Albany,  207  X.  Y.  377,  101  N.  E.  162;  PhoenLx  B.  Co.  v.  U.  S.,  38  Ct. 
CI.  492;  Dermott  v.  Jones  (Ingle  v.  Jones),  2  WaU.  (U.  S.)  1,  17  L.  Ed.  762; 
Jones  V.  U.  S.,  96  U.  S.  24,  24  L.  Ed.  644,  aff'g  11  Ct.  CI.  733;  Link  Belt  Eng. 
Co.  V.  U.  S.,  142  Fed.  243,  247;  U.  S.  v.  Lewis,  237  Fed.  80;  Meriwether  v. 
Lowndes  County,  89  Ala.  362,  7  So.  198;  Rowe  v.  Peabody,  207  Mass.  226, 
93  N.  E.  604;  Trenton  v.  Bennett,  27  N.  J.  L.  515;  Mitchell  v.  Hancock  County, 
91  Mis.s.  414,  45  So.  571;  DLst.  Tp.  of  Union  v.  Smith,  39  Iowa,  9;  Monaca  v. 
Monaca  St.  Ry.,  247  Pa.  St.  242,  93  Atl.  344;  Gathwright  v.  Calloway  County,. 
10  Mo.  663;  Hall  v.  Sch.  Dist.,  24  Mo.  App.  213. 

414 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  292 

predicaments  not  of  his  own  creation,  such  as  the  parties 
never  understood  as  possible,  legitimate  consequences  of 
the  contract,  a  contractor  is  not  bound  to  protect  himself.^ 
Thus  where  a  railroad  company  may  not  proceed  to  carry 
out  its  contract  and  construct  its  road  without  the  consent 
of  certain  municipalities,  through  whose  territory  it  had 
contracted  to  build,  the  obligation  which  the  law  put  upon 
it  not  being  fulfilled  without  its  fault,  it  is  relieved  of  the 
obligation.  2  The  rule  that  an  act  of  God  or  inevitable 
necessity  will  not  relieve  from  an  absolute  promise  is  not 
applied  to  executory  contracts  for  personal  services,  nor 
for  the  sale  of  specific  chattels,  nor  for  the  use  of  particular 
buildings,  because  in  these  contracts  there  is  in  their  very- 
nature  an  implied  condition  that  if  the  person  or  thing 
shall  not  be  in  existence  at  the  time  stipulated  for  perform- 
ance it  shall  not  be  required.^  An  implied  condition  exists 
in  executory  contracts  to  the  effect  that  their  performance 
shall  not  be  rendered  impossible,  by  the  intervention  of 
unforeseen,  accidental  and  uncontrollable  superior  agencies 
and  that  their  performance  is  excused  when  prevented  by 
such  agencies,  as  where  there  is  a  contract  for  the  delivery 
of  specific  property  at  a  future  time  and  before  the  time 
for  delivery  arrives  the  property  is  destroyed  by  inevitable 
accident.^  But  it  is  an  imjwrtant  element  of  that  rule 
that  the  intervention  of  such  causes  will  not  excuse  per- 
formance when  the  essential  purposes  of  the  contract  are 
still  capable  of  substantial  accomplishment,  even  though  a 
literal    performance    has    become    physically    impossible.^ 

1  Monaca  v.  Monaca  St.  Ry.  Co.,  supra;  Meriwether  v.  Lowndes  County, 
supra;  Mitchell  v.  Hancock  County,  91  Miss.  414,  45  So.  571. 

2  Monaca  v.  Monaca  St.  Ry.  Co.,  supra. 

^  Cameron-Hawn  Realty  Co.  v.  Albany,  supra. 

*  Bd.  of  Educ.  Bath  Tp.  v.  Townsend,  63  Ohio  St.  514,  59  N.  E.  223.   See 
WiUington  v.  West  Boylston,  21  Mass.  101. 
5  Bd.  of  Educ.  Bath  Tp.  v.  Townsend,  supra. 

415 


§  293  ]  PERFORMANCE  AND   BREACH  [  PART  V 

§  293.  The  Same — Inevitable  Necessity — Destruction  of 
Subject. 
One  who  voluntarily  enters  into  an  absolute  contract 
to  perform  certain  work,  furnish  certain  materials  or 
supplies  or  erect  a  completed  structure  is  bound  to  do  it 
unless  it  is  absolutely  impossible.^  If  one  contracts  to 
erect  a  building  upon  the  land  of  a  public  body,  perform- 
ing the  labor  and  supplying  the  material,  and  before  the 
building  is  completed  or  accepted,  it  is  destroyed  by  fire 
or  other  casualty,  the  loss  falls  upon  the  contractor,  and 
he  must  rebuild.  The  reason  is  that  the  thing  may  be 
still  done  and  he  has  contracted  to  do  it.  His  contract  is 
to  deliver  a  completed  structure  and  this  may  be  done  by 
erecting  it  over  again.  ^  If  he  agrees  to  erect  and  complete 
a  building  upon  a  particular  site,  no  matter  what  the 
expense,  he  must  provide  such  a  foundation,  upon  that 
spot,  as  will  sustain  it.  If  he  does  not  and  the  building 
falls  down  or  is  blown  down  he  must  reerect  it  as  it 
matters  not  whether  the  consequence  occius  through  his 
fault  or  without  his  fault.  Such  a  contract  is  absolute, 
clear  and  unqualified,  and  must  be  performed.^  Some- 
times contracts  of  this  nature  are  subject  to  implied 
conditions  which  will  excuse  performance.  Where,  from 
the  situation  of  the  parties  at  the  time  the  contract  was 


1  Krause  v.  Crothersville,  162  Ind.  278, 70  N.  E.  264,  65  L.  R.  A.  Ill ;  Board 
of  Educ.  Bath  Tp.  v.  Townsend,  63  Ohio  St.  514,  59  N.  E.  223;  Young  v.  Chico- 
pee,  186  Mass.  518,  72  N.  E.  63;  Sch.  Dist.  v.  Dauchy,  25  Conn.  530;  Eaton  v, 
Sch.  Dist.,  23  Wis.  374;  Trenton  v.  Bennett,  27  N.  J.  L.  513;  Kinzer  v.  State 
125  X.  Y.  Supp.  46,  145  N.  Y.  App.  Div.  41,  204  N.  Y.  381,  97  N.  E.  871; 
Cameron-HawTi  Realty  Co.  v.  Albany,  207  N.  Y.  377,  101  N.  E.  162;  Livingstoa 
County  V.  Graves,  32  Mo.  479;  Bentley  v.  State,  73  Wis.  416,  41  N.  W.  338; 
Chapman  v.  Montgomery  W.  P.  Co.,  126  Fed.  372;  Dale  v.  U.  S.,  14  Ct.  CI. 
514;  Jones  v.  U.  S.,  96  U.  S.  24,  24  L.  Ed.  644,aff'g  11  Ct.  CI.  733;  Sickels  v. 
U.  S.,  1  Ct.  CI.  214. 

^  Trenton  v.  Bennett,  supra. 

'  Idem. 

416 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  293 

made,  it  is  apparent  that  they  must  have  known  that  its 
performance  would  be  impossible  unless  a  thing  then  in 
existence  should  continue  to  exist,  or  some  condition  or 
thing  should  come  into  existence  before  performance  and 
remain  in  existence  during  performance,  there  arises  an 
implied  condition  of  the  contract  that  if  that  thing  or 
condition  is  destroyed  or  prevented  from  coming  into 
existence  before  the  time  of  performance,  without  the 
fault  of  the  party  bound  to  go  forward  with  performance, 
either  by  act  of  God  or  by  an  unavoidable  accident, 
such  party  will  be  absolved  from  liability  for  failure  to 
perform.^  But  if  a  contract  is  to  expend  labor  upon  a 
specific  subject,  the  property  of  another,  or  to  bestow 
labor  and  materials  upon  a  particular  building  or  chattel 
as  to  shoe  his  horse,  or  slate  or  paint  his  building  or  put 
an  annex  or  addition  thereto  or  make  repairs  or  alterations 
therein,  it  is  obvious  that  its  destruction  prevents  a 
compliance  with  the  undertaking.  So,  if  the  horse  dies  or 
the  building  is  destroyed  by  fire,  lightning,  flood  or  tornado 
before  the  work  is  done,  the  performance  of  the  contract 
becomes  impossible  and  with  the  principal  substance 
perishes  the  incident.  In  such  a  case  the  contractor  is 
relieved  from  further  performance.^  He  may  not  sue  on 
the  contract  for  he  has  not  performed  the  contract  so  that 
its  stipulations  may  be  availed  of,  but  he  may  sue  on 
quantimi  meruit  for  the  reasonable  value  of  the  work 
done.^  Where,  however,  the  contract  provided  for  payment 
of  a  stated  sum  during  the  progress  of  the  work  and  such 
sum  has  been  paid,  no  further  recovery  will  be  permitted 

^  Krause  v.  Crothersville,  supra;  Young  v.  Chicopee,  supra;  Trenton  v. 
Bennett,  supra. 

2  Trenton  v.  Bennett,  supra;  Krause  v.  Crothersville,  supra;  Young  v.  Chico- 
pee, supra. 

^  Kraiise  v.  Crothersville,  supra;  Young  v.  Chicopee,  supra. 

417 


§  293  ]  PERFORMANCE  AND  BREACH        [  PART  V 

even  on  quantum  meruit.^  The  liability  imposed  upon  a 
public  body  only  extends  to  require  payment  for  such 
labor  and  materials  as  have  actually  been  made  a  part  of 
the  stiTJcture  destroyed.^  A  contractor  agreeing  to  dehver 
a  certain  kind  of  hay  during  a  certain  period  is  excused 
from  performance,  within  these  principles,  where  there  is 
an  entire  failure  of  the  crop  of  that  particular  kind  of  hay 
during  the  period.^  But  unforeseen  difficulties  or  hard- 
ships will  not  excuse  him.^  A  strike  at  the  mines  will  not 
reheve  from  an  absolute  contract  to  furnish  coal.^  Where 
a  contractor  absolutely  agrees  to  construct  a  tunnel,  and 
agrees  to  take  all  responsibility  for  losses  on  account  of 
the  nature  or  character  of  the  soil,  for  which  the  public 
body  denied  all  responsibility,  and  where  he  is  warned 
that  there  may  be  such  difficulties,  and  later  he  encounters 
them  and  abandons  his  agreement,  he  cannot  excuse  it 
because  the  nature  of  the  ground  makes  performance 
practically  impossible  or  impracticable  without  a  very 
large  and  disproportionate  expense.^  Courts  will  not 
consider  the  hardship  or  the  expense  or  the  loss  to  the 
one  party  or  the  meagerness  or  the  uselessness  of  the 
result  to  the  other.  They  will  neither  make  nor  modify 
contracts  nor  dispense  with  performance.  The  party  who 
creates  a  duty  or  charge  upon  himself  is  bound  to  a 
possible  performance  of  it,  because  he  promises  it  and  fails 
to  protect   himself    by   suitable    conditions    or    qualifica- 

1  Krause  v.  Crothersville,  supra. 

2  Young  V.  Chicopee,  supra. 

3  Browne  v.  U.  S.,  30  Ct.  CI.  124. 

*  Penn.  Bridge  Co.  v.  Kershaw  County,  226  Fed.  728;  U.  S.  v.  Gleason,  175 
U.  S.  588,  44  L.  Ed.  284;  Lewman  v.  U.  S.,  41  Ct.  Ci.  470;  Dewey  v.  Union 
Sch.  Dist.  of  Alpena,  43  Mich.  480,  5  N.  W.  646;  St.  Joseph  County  v.  South 
Bend  &  M.  St.  Ry.  Co.,  118  Ind.  68,  20  N.  E.  499. 

5  Peabody  v.  U.  S.,  45  Ct.  CI.  532. 

«  Rowe  V.  Peabody,  207  Mass.  266,  93  N.  E.  604.  See  Kinser  v.  State,  125 
N.  Y.  Supp.  46,  145  App.  Div.  41,  204  N.  Y.  381,  97  N.  E.  871. 

418 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  294 

tions.^  Parties  who  fairly  and  voluntarily  assume  hard 
bargains  cannot  claim  relief  from  them  for  that  cause.  ^ 
Nor  will  the  law  relieve  a  man  from  a  contractual  obligation 
because  he  believes  with  good  cause  that  the  person  with 
whom  he  has  contracted  will  be  imable  to  perform.^ 

One  making  an  absolute  contract  is  bound  to  respond 
in  damages  for  its  non-performance.  If  after  he  has 
substantially  but  not  completely  finished  a  structure  and 
before  its  delivery  it  is  destroyed  by  fire,  he  is  liable  to  an 
action  for  money  advanced  upon  the  contract  and  damages 
for  its  non-performance.* 

§  294.  Cancellation  of  Contract  Rendering  Performance  of 
Subcontractor  Impossible. 

Parties  cannot  be  relieved  of  contracts  fairly  made  with 
full  knowledge  of  the  facts,  although  they  mistake  their 
rights  or  fail  sufficiently  to  qualify  and  limit  their  lia- 
biUties.^  If  a  contractor  makes  an  absolute  contract  with 
a  subcontractor  to  do  certain  work,  and  he  fails  to  provide 
in  it  that  in  case  his  principal  contract  with  the  public 
body  is  terminated  under  a  reserved  power  so  to  do  or  for 
other  cause,  a  contingency  which  may  be  foreseen  and 
provided  against  in  the  subcontract,  and  later  the  con- 
tract is  cancelled  by  the  issuance  of  a  certificate  by  the 
engineer  that  the  contract  is  not  progressing  so  as  to 
indicate  its  completion  within  the  time  limited  for  per- 
formance the  subcontractor  may  recover  his  damages.^ 
The  contractor  may  protect  himself  by  providing  that  his 

»  Cameron  Hawn  R.  Co.  v.  Albany,  207  N.  Y.  377,  101  N.  E.  162. 

2  Southington  v.  Southington  Water  Co.,  80  Conn.  646,  69  Atl.  1023. 

3  Coonan  v.  Cape  Girardeau,  149  Mo.  App.  609,  129  S.  W.  745.  But  see 
Cramp  &  Sons  Co.  v.  U.  S.,  50  Ct.  CI.  179. 

4  Tompkins  v.  Dudley,  25  N.  Y.  272. 

6  John  Soley  &  Sons  v.  Jones,  208  Mass.  561,  95  N.  E.  94. 
8  Idem . 

419 


§  294  ]         PERFORMANCE  AND  BREACH        [  PART  V 

promise  is  dependent  upon  the  continued  existence  of  the 
principal  contract.  Such  a  condition  may  be  impHed  if 
the  principal  contract  is  in  its  entirety  incorporated  into 
the  subcontract  by  reference,  but  it  will  not  be  read  into 
the  latter  by  implication.  By  an  absolute  promise  the 
contractor  will  make  himself  responsible  for  the  continued 
existence  of  the  subject-matter  of  the  contract  until  its  per- 
formance is  completed  without  fault  by  the  subcontractor.^ 
Where  the  contract  is  not  dissolved,  a  subcontractor 
is  not  limited  to  compensation  for  the  fair  value  of  the 
work  done  with  a  reasonable  profit  for  such  work  and  also 
upon  the  work  remaining  to  be  done.  Nor  is  he  restricted 
to  a  simi  which  would  be  proportionate  to  the  contract 
price  which  the  contractor  would  receive  from  the  public 
body.  On  the  contrary,  he  is  entitled  to  the  benefit  of  his 
contract,  after  deducting  from  it  the  reasonable  cost  of 
completing  the  work.^  But  the  rule  is  otherwise  where 
further  performance  is  prevented,  by  authority  of  the 
State  through  passage  of  a  statute.^ 

§  295.  Sickness — Death. 

The  act  of  God  in  the  death  of  a  party  will  not  dissolve 
the  contract  or  excuse  performance  except  in  the  case  of  a 
contract  requiring  personal  service,  and  then  the  law  will 
imply  an  exception.^  If  personal  services  are  not  contem- 
plated or  required,  performance  is  not  excused  because  of 
sickness  or  other  disability.^     Contracts  of  this  character 

1  John  Soley  &  Son  v.  Jones,  supra. 

3  Jones  V.  Judd,  4  N.  Y.  411.  See  Devlin  v.  New  York,  63  N.  Y.  8.  See 
§  291. 

<  Devlin  v.  Mayor,  63  N.  Y.  8;  Hall  v.  Sch.  Dist.,  24  Mo.  App.  213;  Cameron- 
Hawn  Realty  Co.  v.  Albany,  207  N.  Y.  377,  101  N.  E.  162.  See  Willington  v. 
West  Boylston,  21  Mass.  101. 

*  West  Chicago  Park  Commr's  v.  Carmody,  139  111.  App.  635. 

420 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  296 

for  personal  services,  whether  of  the  contracting  party  or 
of  a  third  person,  requiring  skill  and  which  can  only  be  per- 
formed by  the  particular  person  named,  are  not  in  the 
nature  of  an  absolute  obligation  imder  all  circumstances. 
There  is  an  implied  condition  that  the  person  shall  be  able 
to  perform  the  services  at  the  time  fixed  for  performance, 
and  if  he  dies,  or  without  fault  on  the  part  of  the  promisor 
he  becomes  disabled,  the  obhgation  to  perform  is  extin- 
guished.^ But  sickness  will  not  admit  of  recovery  upon  an 
entire  and  indivisible  contract  which  has  not  been  per- 
formed.^ 

§  296.  Where  Conditions  Essential  to  Performance  do  not 
Exist. 

Where  a  contractor  enters  into  a  contract  to  perform 
public  work  and  contingencies  arise  which  the  contract 
does  not  expressly  cover,  and  which  render  performance 
of  the  contract  as  intended  and  planned  impossible,  and 
make  necessary  substantial  changes  in  the  nature  and  cost 
of  the  work  and  bear  materially  upon  the  remainder  of  the 
work,  the  law  reads  into  the  contract,  as  of  its  inception, 
the  implied  condition  that  such  contingency  will  terminate 
the  contract.^  It  is  not  necessary  that  the  parties  had  the 
contingency  in  mind,  for  had  they  considered  it,  they 
would  have  provided  against  it.  It  is  not  something  which 
fthe  parties  omitted  and  the  courts  will  feel  justified  in 
supplying,  but  something  which  will  be  impUed  by  force 
of  law.* 

In  such  a  situation  the  contract  is  at  an  end  and  both 

1  Devlin  v.  Mayor,  supra;  Cameron-Hawn  Realty  Co.  v.  Albany,  supra; 
Jones  V.  Judd,  4  N.  Y.  411;  People  v.  Manning,  8  Cowen,  297. 

2  Davidson  v.  Gaskill,  32  Okla.  40,  121  Pac.  649. 

3  Kinser  Cons.  Co.  v.  State,  125  N.  Y.  Supp.  46,  145  N.  Y.  App.  Div.  41,  204 
N.  Y.  381,  97  N.  E.  871. 

*  Idem. 

421 


§  296  ]  PEKFORMANCE  AND  BREACH        [  PART  V 

parties  are  excused  from  further  performance.  Where  the 
work  has  been  stopped,  under  a  stop  order  issued  by  the 
pubhc  body  because  of  natural  conditions  of  the  soil  which 
render  further  performance  impossible,  the  contractor  is 
entitled  to  recover  for  work  done  and  for  benefits  received 
by  the  pubhc  body  under  the  contract  down  to  the  time 
the  conditions  were  discovered  and  for  such  damages  as 
may  have  resulted  from  the  stop  order.  He  may  not 
recover  for  loss  of  profits  or  items  of  expense  which  he  would 
have  been  entitled  to  recover   had    there  been  a  breach.^ 

§  297.  Physical  Impossibility — Impracticability. 

Where  a  contract  contemplates  the  doing  of  work  or  the 
furnishing  of  a  commodity  so  long  as  it  is  reasonably  pos- 
sible to  do  so,  the  rule  that  where  a  contracting  party 
undertakes  to  do  something  which  he  afterwards  finds  to 
be  impossible,  he  nevertheless  must  suffer  the  consequences 
of  the  violation  of  his  contract,  has  no  appUcation.^  Where 
the  nature  of  the  venture  is  uncertain  and  this  was  clearly 
in  the  minds  of  the  parties,  and  the  contract  was  not  to 
furnish  a  conamodity  at  all  events,  but  if  reasonably  pos- 
sible, he  is  entitled  to  have  these  facts  considered  in  deter- 
mining his  liabihty.^  Indeed  there  are  some  contracts  into 
which  the  law  itself  will  write  the  word  reasonably,  as 
unavoidably  within  the  contemplation  of  the  parties. 
Where  a  contract  provides  for  additions  and  changes  in 
the  work  as  are  necessary,  the  law  implies  the  term  ''rea- 
sonably" before  the  term  "necessary."  This  protects  the 
contractor  against  unreasonable  action,  and  the  pubhc 
body  against  unforeseen  conditions  which  defeat  the  origi- 

'  Kinser  v.  State,  supra. 

^  Jackson   County  Light  H.  &  P.  Co.  v.  Independence,  188  Mo.  App.  157, 
175  S.  W.  86. 
^  Idem. 

422 


CHAP.  XLIII  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  297 

nal  plan.  Reasonable  necessity  will  not  require  absolute 
or  physical  impossibility,  but  even  though  possible  from  an 
engineering  standpoint,  if  the  expense  to  perform  it,  under 
the  conditions  revealed  is  so  enormous  as  to  make  it 
impracticable,  performance  is  impossible  within  the  mean- 
ing of  the  contract.^ 

1  Kinaer  Cons.  Co.  v.  State,  205  N.  Y.  381,  97  N.  E.  871. 


423 


CHAPTER  XLIV 

PERFORMANCE — EXCUSE  FOR  NON-PERFORMANCE    OC- 
CASIONED BY  ACT  OF  PUBLIC  BODY 

§  298.  Non-Performance  Occasioned  by  Act  of  Public 
Body. 

Good  faith  is  an  essential  element  of  all  contracts  and  is 
an  implied  condition  of  every  contract.^  There  is  an  im- 
plied undertaking  upon  the  part  of  each  party  that  he  will 
not  intentionally  and  purposely  do  anything  to  prevent  the 
other  party  from  carrying  out  the  agreement.^  It  is  a  vio- 
lation of  these  conditions  for  one  to  voluntarily  put  it  out 
of  his  power  to  perform  a  contract.  A  party  who  prevents 
performance  by  his  own  act  is  in  no  position  to  object  that 
the  contract  remains  unperformed,  and  when  performance 
is  thus  rendered  impossible  by  the  act  of  the  pubHc  body 
or  its  agents,  non-performance  is  excused.^ 

Where  the  officers  and  agents  of  a  public  body  arrest  a 
contractor's  work  and  prevent  the  fulfillment  of  his  con- 
tract and  this  is  done  with  an  honest  view  to  obtain  for 
the  public  some  lawful  benefit  or  advantage,  reason  and 
justice  require  that  the  public  body  in  its  corporate  capac- 
ity shall  be  Hable  for  the  acts  thus  done.^ 

A  contractor  thus  prevented  from  proceeding  may  aban- 
don his  contract  and  justify  his  conduct  because  of  the  acts 

1  Gardner  v.  Cameron,  155  N.  Y.  App.  Div.  750. 

2  Cameron-Hawn  Realty  Co.  v.  Albany,  207  N.  Y.  377,  101  N.  E.  162. 
'  Murphy  v.  St.  Louis,  8  Mo.  App.  483. 

*Kingsley  v.  Brooklyn,  78  N.  Y.  200;  Mahan  v.  Mayor,  10  Misc.  664; 
U.  S.  V.  United  Eng.  Co.,  234  U.  S.  236,  58  L.  Ed.  1294,  aff'g  47  Ct.  CI.  489; 
U.  S.  V.  Peck,  102  U.  S.  64,  26  L.  Ed.  46;  Soulard  v.  St.  Louis,  36  Mo.  546; 
Hawks  V.  Charlemont,  107  Mass.  414. 

424 


CHAP.  XLIV  ]       EXCUSE   FOR   NON-PERFORMANCE  [  §  298 

of  the  public  body.^  Where  a  contractor  with  the  govern- 
ment agreed  to  furnish  hay  contemplated  to  be  obtained 
from  a  certain  source,  and  the  supply  of  hay  which  he 
depended  upon  was  taken  away  by  the  government,  this 
hindrance  to  the  performance  of  his  contract  excused  his 
non-performance. 2  If  suspension  of  work  is  caused  by  the 
direct  act  of  the  pubhc  body,  and  is  not  occasioned  by 
unwillingness  of  the  contractor  to  comply  with  his  contract, 
the  contractor  is  Hkewise  excused.^  But  interference  by 
the  pubUc  body  to  prevent  the  contractor  from  doing  his 
work  improperly  may  not  be  claimed  as  an  excuse  for 
failure  to  perform.''  Under  some  circumstances  the  contractor 
is  Umited  to  a  recovery  upon  quantum  meruit  and  may  not  sue 
upon  the  contract.^  But  a  contractor  whose  executory  con- 
tract is  unjustifiably  abrogated  is  entitled,  notwithstanding 
the  wrongful  acts  of  the  public  body,  to  the  profits  and  ad- 
vantages which  would  have  enured  to  him  as  the  direct  and 
immediate  fruits  of  the  contract,  had  he  been  permitted  to 
perform  it.  Where  he  is  wrongfully  deprived  of  the  gains 
and  profits  of  his  executory  contract  he  may  recover  as  an 
equivalent,  and  by  way  of  damages,  the  difference  between 
the  contract  price,  the  amount  which  he  would  have  earned 
and  been  entitled  to  recover  on  performance,  and  the 
amount  which  it  would  have  cost  him  to  perform.^  His 
loss  consists,  where  he  has  partly  performed,  of  two  items 
or  grounds  of  damage,  first,  what  he  has  already  expended 

1  Devlin  v.  Mayor,  63  N.  Y.  8;  Jones  v.  Judd,  4  N.  Y.  411;  Mahan  v.  Mayor, 
supra;  U.  S.  v.  Behan,  110  U.  S.  338,  28  L.  Ed.  168. 

2  U.  S.  V.  Peck,  102  U.  S.  64. 

3  Wood  V.  U.  S.,  49  Ct.  CI.  119. 

*  Douglas  V.  Lowell,  194  Mass.  268,  80  N.  E.  510. 

8  Glidden  State  Bk.  v.  Sch.  Dist.  of  Jacobs,  143  Wis.  617,  128  N.  W.  285. 

^Masterson  v.  Mayor,  7  Hill,  61;  Clark  v.  Mayor,  4  N.  Y.  338;  Devlin  v. 
Mayor,  63  N.  Y.  8;  Long  Island  C.  &  S.  Co.  v.  New  York,  204  N.  Y.  73,  97 
N.  E.  483. 

425 


§  298  ]  PERFORMANCE  AND  BREACH        [  PART  V 

toward  performance,  less  the  value  of  materials  on  hand, 
second,  the  profits  that  he  would  have  reahzed,  so  long  as 
they  are  not  too  speculative  and  remote.  If  he  undertakes 
to  prove  profits,  these  will  be  measured  by  the  difference 
between  the  cost  of  doing  the  work  and  what  the  con- 
tractor was  to  receive  for  it.^ 

§  299.  Abandonment  of  Contract  by  Public  Body  During 
Performance — Remedy  of  Contractor — Damages 
— Injunction. 

Public  bodies  cannot  be  compelled  to  proceed  with  the 
prosecution  of  a  public  work  at  the  instance  of  a  contractor 
with  whom  the  public  body  has  made  a  contract  for  such 
work.  Public  bodies  stand  in  this  respect  in  the  same  posi- 
tion as  individuals,  and  may  at  any  time  violate,  abandon 
or  renounce  their  contracts  or  enterprises  which  they  have 
undertaken.  They  may  refuse  to  allow  the  contractor  to 
proceed,  or  may  assume  the  control  of  the  work  and  per- 
form the  work  included  in  the  contract  by  their  own 
immediate  servants  or  agents,  or  they  may  let  a  new  con- 
tract for  its  performance  by  other  persons.  All  of  this  may 
be  done,  although  there  has  been  no  default  upon  the  part 
of  the  contractor,  upon  the  usual  terms  of  compensation 
in  damages  which  are  recognized  and  allowed  by  law.^  The 
public  body  may  thus  violate  its  contract,  but  the  obliga- 
tion remains  and  cannot  be  impaired  by  the  refusal  of  the 
public  body  to  perform.^ 

If  in  such  a  case  the  public  body  undertakes  to  let  a 

1  U.  S.  V.  Behan,  110  U.  S.  338,  28  L.  Ed.  168;  Speed's  Case,  2  Ct.  CI.  429, 
aff'd  8  WaU.  77,  19  L.  Ed.  449,  S.  C.  7  Ct.  CI.  93. 

2  Lord  V.  Thomas,  64  N.  Y.  107;  Danolds  v.  State,  89  N.  Y.  36;  Wakefield 
Cons.  Co.  V.  New  York,  157  N.  Y.  App.  Div.  535,  213  N.  Y.  633,  107  N.  E. 
1087;  Sewer  Commr's  v.  Sullivan,  11  N.  Y.  App.  Div.  472,  162  N.  Y.  594,  57 
N.  E.  1123. 

'  Lord  V.  Thomas,  supra;  Danolds  v.  State,  supra;  U.  S.  v.  Behan,  110  U.  S. 
338,  28  L.  Ed.  168. 

426 


CHAP.  XLIV  ]        EXCUSE   FOR   NON-PERFORMANCE  [  §  299 

new  contract  to  complete  a  work  under  authority  of  law, 
the  courts  will  not  enjoin  it  from  proceeding  to  execute  the 
authority  conferred  by  advertising  for  new  bids.^  A 
threat  to  abandon  work  not  followed  by  actual  abandon- 
ment by  the  contractor  or  injury  to  the  public  body  will 
not  justify  expulsion  from  the  work  or  forfeiture  of  the 
rights  of  the  contractor.  As  long  as  the  work  continues 
and  no  injury  or  change  of  situation  occurs  by  reason  of 
what  is  merely  said,  the  public  body  has  no  right  of  com- 
plaint and  may  not  act  as  if  an  actual  abandonment  had 
taken  place.  If  it  does,  the  contractor  may  recover  the 
damages  he  sustains. ^ 

1  Lord  V.  Thomas,  sitjn-a. 

2  Sewer  Commr's  v.  Sullivan,  supra. 


427 


CHAPTER  XLV 

PERFORMANCE — ACCEPTANCE  OF 

§  300.  Acceptance  of  Work. 

If  a  contract  is  not  completed  within  the  time  specified 
or  not  properly  performed,  but  is  accepted  by  the  proper 
public  authorities,  such  acceptance  is  binding  in  the 
absence  of  fraud.  ^  If  at  the  time  of  acceptance  the  public 
body  has  a  right  of  action  against  the  contractor  for 
failure  to  comply  with  the  contract,  because  of  defective 
construction  or  because  of  failure  to  complete  in  time,  such 
action  is  not  waived  or  barred  by  reason  of  the  accept- 
ance.^ 

The  mere  use  and  occupancy  of  a  building,  bridge  or 
roadway  erected  or  repaired  not  in  conformity  with  the 
contract  is  not  to  be  considered  an  acceptance  of  the  work 
as  a  fulfillment  of  the  contract.  Acceptance  cannot  result 
from  the  mere  use  of  the  work  or  structure  by  the  pub- 
lic,^ nor  even  from  a  making  of  repairs  to  it  after  such  use.* 
If  a  contractor  neglects  and  refuses  to  complete  his  con- 
tract in  a  material  point,  the  pubUc  body  does  not  waive 
its  performance  by  taking  possession  of  and  occupying  the 
structure  in  its  defective  condition.  The  pubhc  body 
are  not  put  in  the  absurd  alternative  either  of  losing  and 

'  Mesabo  City  Water  Co.  v.  Mesabo,  136  Mo.  498,  38  S.  W.  89;  Harris 
County  V.  Campbell,  68  Tex.  22,  3  S.  W.  243. 

^  Mesabo  City  Water  Co.  v.  Mesabo,  supra. 

3  New  York  v.  Dexter,  59  Misc.  (N.  Y.)  157;  Douglas  v.  Lowell,  194  Mass. 
268,  80  N.  E.  510;  Taft  v.  Montague,  14  Mass.  282,  7  Am.  Dec.  215;  Reed  v. 
Bd.  of  Educ,  4  Abb.  App.  Dec.  24;  Wildey  v.  Fractional  Sch.  Dist.,  25  Mich. 
419;  Smith  v.  Scott's  Ridge  Sch.  Dist.,  20  Conn.  312. 

*  Taft  V.  Montague,  supra. 

428 


CHAP.  XLV  ]      PERFORMANCE — ACCEPTANCE  OF  [§  301 

abandoning  the  structure  or  of  occupying  it  at  the  peril  of 
paying  for  work  not  performed  and  of  waiving  thereby  the 
performance  of  substantial  covenants  of  the  contract.^  It 
is  not  a  waiver  of  defects  to  use  and  occupy  a  structure.^ 
A  public  body  is  entitled  to  retain  without  compensation 
the  benefits  of  a  partial  performance,  where  from  the  nature 
of  the  contract  it  must  receive  such  benefits  in  advance  of 
performance,  and  by  its  terms  or  just  construction  it  is 
under  no  obligation  to  pay  until  performance  is  complete.^ 
Even  payment  and  acceptance  will  not  prevent  recovery  by 
the  public  body  for  latent  defects  discovered  after  pay- 
ment and  acceptance.  The  right  of  action  for  damages 
therefor  will  survive.^  The  acceptance  of  work  as  it  pro- 
gresses which  is  approved  and  passed  by  the  officers  of  the 
public  body  is,  however,  binding  as  an  acceptance.^ 
Where  an  individual  owner  of  property  questions  the 
validity  of  an  assessment  therefor  he  is  bound  by  accept- 
ance of  the  work  by  the  public  authorities.  In  the  ab- 
sence of  fraud  or  collusion  such  acceptance  is  conclusive 
evidence  that  the  work  was  performed  according  to  the  re- 
quirements of  the  contract.^ 

§  301.  Waiver  of  Strict  Compliance. 

It  is  elementary  that  strict  compliance  with  the  terms 
of  a  public  contract  on  the  part  of  one  party  may  be 
waived  by  the  other,  so  long  as  the  requirement  or  term 

1  Reed  v.  Bd.  of  Educ,  supra. 

2  Idem. 

3  Bonesteel  v.  Mayor,  22  N.  Y.  166. 

*  U.  S.  V.  Walsh,  115  Fed.  697. 

*  Brady  v.  New  York,  132  N.  Y.  415,  30  N.  E.  757;  Lamson  v.  MarshaU,  133 
Mich.  250,  95  N.  W.  78. 

8  Emery  v.  Bradford,  29  Cal.  75;  Dixon  v.  Detroit,  86  Mich.  516,  49  N.  W. 
628;  State  v.  McCardy,  87  Minn.  88,  91  N.  W.  263;  Chance  v.  Portland,  26 
Oreg.  286,  38  Pac.  68;  Mason  v.  Des  Moines,  108  Iowa,  658,  79  N.  W. 
389. 

429 


§  301  ]  PERFORMANCE   AND   BREACH  [  PART  V 

waived  is  one  made  by  the  contract  itself.^  While  statu- 
tory provisions  may  not  be  waived  by  a  public  body,  the 
terms  of  the  contract  may  be  waived. 

1  Capital  City  B.  Co.  v.  Des  Moinea,  127  N.  W.  (Iowa)  66;  Atkinson  v. 
Davenport,  117  Iowa,  687,  84  N.  W.  689;  People  ex  rel.  Ready  v.  Mayor,  65 
Hun,  321,  144  N.  Y.  63,  38  N.  E.  1006;  Central  Bitulithic  Pav.  Co.  v.  Mt. 
'Clemens,  143  Mich.  259,  106  N.  W.  888;  Wiley  v.  Athol,  150  Mass.  426,  23 
JST.  E.  311;  Farrellv  v.  U.  S.,  159  Fed.  671;  Ittner  v.  U.  S.,  43  Ct.  CI.  336. 


430 


CHAPTER    XLVI 

PERFORMANCE   AND   BREACH 

§  302.  Performance — Discharge  of  Contract — By  Breach — 
Failure  to  Make  Payment. 
When  a  public  body  employs  a  contractor  to  perform 
certain  work  and  agrees  to  compensate  him  by  install- 
ment payments  to  be  made  periodically  or  as  the  work 
progresses,  the  failure  to  make  a  payment  at  the  time 
when  it  becomes  due  is  such  a  breach  of  a  material  term 
as  justifies  the  contractor  in  refusing  to  complete  the 
contract  and  entitles  him  to  recover  the  value  of  his  work 
up  to  the  time  of  the  abandonment.^  This  is  especially 
true  in  building  and  construction  contracts  calhng  for  the 
performance  of  labor  and  furnishing  of  materials  covering 
a  long  period  of  time  and  involving  large  expenditures.  A 
provision  for  payments  on  account  as  the  work  progresses 
in  such  a  contract  must  be  deemed  so  material  that  a 
substantial  failure  to  pay  will  justify  the  contractor  in 
declining  to  proceed. ^  It  must  have  been  in  the  con- 
templation of  the  parties  that  the  contractor  could  not  be 
expected  to  finance  the  operation  to  completion  without 
receiving  the  stipulated  payments  on  account  as  the  work 
progressed.    A  substantial  compliance  with  the  stipulation 

1  Devlin  v.  New  York,  124  N.  Y.  App.  Div.  184;  Price  v.  New  York,  104 
Id.  198,  182  N.  Y.  516,  74  N.  E.  1124;  Peet  v.  East  Grand  Forks,  101  Minn. 
518,  112  N.  W.  1003;  Sch.  Dist.  v.  Hayne,  46  Wis.  511,  1  N.  W.  170;  San 
Francisco  Bridge  Co.  v.  Dumbarton  L.  Co.,  119  Cal.  272,  51  Pac.  335;  Guerini 
Stone  Co.  v.  CarUn  Cons.  Co.,  248  U.  S.  334,  63  L.  Ed.  275;  Canal  Co.  v. 
Gordon,  6  Wall.  (U.  S.)561;  Dyer  v.  Irrig.  Dist.,  25  Wash.  80,  64  Pac.  1009; 
Greenlee  County  v.  Cotey,  14  Ariz.  542,  155  Pac.  302. 

2  Guerini  Stone  Co.  v.  Carlin  Cons.  Co.,  supra. 

431 


§  302  ]  PERFORMANCE   AND    BREACH  [  PART  V 

for  advance  payments  is  a  condition  precedent  to  the 
obligation  of  the  contractor  to  continue  with  the  work.^ 
A  contractor's  remedies  are  twofold.  He  may  stop  work, 
repudiate  the  contract  and  recover  the  contract  price 
for  the  work  done  or  he  may  continue  to  work  and  sue  for 
the  past  due  installment.-  No  good  reason  exists  for 
limiting  the  contractor  upon  a  breach  to  the  contract 
prices  unless  they  are  made  to  control.  He  should  have 
the  reasonable  value  of  work  done  up  to  the  time  of  the 
breach.^  But  the  breach  may  be  waived  and  is  waived  if 
not  availed  of  at  the  time  of  the  breach.  By  proceeding 
with  the  work  the  contractor  waives  the  damage  which  he 
suffers.-*  Where  of  course  the  stipulation  for  payment  is 
treated  as  a  subsidiary  or  unsubstantial  term  of  the  con- 
tract it  is  declared  that  the  failure  to  pay  is  not  sufficient 
ground  for  abandonment,  but  that  the  sole  remedy  is  an 
action  for  damages  for  breach  of  the  covenant.  How  this 
term  of  the  contract  can  be  regarded  as  other  than  sub- 
stantial is  difficult  of  conception.  If  the  contract  provides 
for  the  issue  of  a  certificate  by  the  engineer  before  an 
instalhnent  payment  shall  be  due,  this  is  a  condition 
precedent  unless  it  is  withheld  fraudulently,  arbitrarily  or 
unreasonably.^  Where  the  pubUc  body  has  thirty  days  by 
express  charter  pro\dsion  to  pay  all  claims  presented  to  it, 
a  delay  for  that  time  after  presentation  of  claim  will  not 
justify  an  abandonment  by  the  contractor  or  constitute  a 
breach   of    the   contract.^     And   where   a   contractor   has 

1  Guerini  Stone  Co.  v.  Carlin  Cons.  Co.,  supra;  Canal  Co.  v.  Gordon,  supra. 

2  Mechanics  Bank  v.  New  York,  164  N.  Y.  App.  Div.  128;  Cranford  Co.  v. 
New  York,  150  N.  Y.  App.  Div.  195;  County  of  Christian  v.  Overholt,  18 
lU.  223. 

3  Greenlee  County  v.  Cotey,  supra. 

<  Mechanics  Bk.  v.  New  York,  supra. 
'•>  Devlin  v.  New  York,  supra. 

8  Cranford  Co.  v.  New  York,  150  N.  Y.  App.  Div.  195,  211  N.  Y.  534,  105 
N.  E.  1082. 

432 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  302 

accepted  several  previous  payments,  which  were  delayed, 
apparently  without  any  protest,  this  establishes  a  course 
of  dealing  indicating  that  a  reasonable  delay  was  recog- 
nized as  an  incident  of  payment  and  a  contractor  may  not 
depart  from  acquiescence  in  such  a  course  of  dealing  unless 
he  gives  reasonable  notice  of  his  intention  so  to  do.^  In 
some  jurisdictions  the  payment  of  installments  is  not 
considered  a  condition  precedent  to  further  performance, 
unless  made  so  by  express  provision  of  the  contract.- 
And  where  the  contract  is  entire  the  failure  to  make  a 
payment  because  the  work  is  not  progressing  in  accordance 
with  the  contract  is  justified,  and  the  failure  to  pay  can  in 
no  sense  be  considered  a  breach.  In  other  words,  a  con- 
tractor cannot  claim  a  default  for  failure  to  pay  while  he 
is  likewise  in  default  under  the  contract.^  Where  under 
a  contract  to  furnish  coal  the  engineer  issues  his  certificates 
showing  pajmaents  to  be  due  and  the  pubUc  body  fails  to 
make  the  payments,  the  estimates  and  certificates  are 
conclusive  upon  the  parties;  and  the  contractor  for  failure 
to  pay  may  claim  a  breach,  and  give  notice  of  election  to 
terminate  the  contract  and  sue  for  the  amounts  due  for 
the  deUveries,  together  with  interest  and  the  amount  of 
percentage  retained.^  Some  cases  attempt  to  draw  a 
distinction  between  the  effect  of  a  default  in  payment  of 
an  instalhnent  when  it  becomes  due  arising  from  mere 
temporary  inability  and  a  deliberate  refusal  to  pay.  They 
recognize  that  the  former  may  be  a  breach  which  will 
justify  a  contractor  in  abandoning  the  work  and  recovering 
for  what  has  been   performed,   but   they  assert   that  he 

1  Cranford  Co.  v.  New  York,  supra;  Williams  v.  New  York,  130  N.  Y.  App. 
Div.  182. 

2  County  of  Christian  v.  Overholt,  supra. 

3  National  Cont.  Co.  v.  Comm.,  183  Maas.  89,  66  N.  E.  639. 
*  Price  V.  New  York,  supra. 

433 


§  302  ]  PERFORMANCE  AND   BREACH  [  PART  V 

will  not  be  entitled  to  prospective  profits.  These  author- 
ities agree  that  mere  delay  in  paying  installments  may  be 
so  inexcusable  or  unreasonable  or  may  point  to  such  an 
utter  inability  to  perform  as  to  be  equivalent  to  a  refusal 
to  perform.  They  then  declare,  in  such  a  case,  as  in  the 
case  of  a  dehberate  refusal  to  pay,  he  may  recover  prospec- 
tive profits.  This  reasoning  seems  to  be  based  upon  a 
supposed  difference  in  the  obhgation  to  pay  under  a  public 
contract  from  that  under  a  private  contract.  They  con- 
tend that  a  contractor  who  deals  with  a  pubHc  body  must 
not  look  for  the  same  promptitude  in  payment  as  if  he 
had  a  private  contract,  that  he  must  expect  occasional 
delays  and  inconvenience.^  There  can  be  no  just  founda- 
tion for  such  a  distinction.  A  contractor  who  receives  the 
obligation  of  a  public  body  should  not  be  compelled  to 
finance  the  work.  He  has  no  right  to  assume  an  impHed 
privilege  in  a  public  contract  to  commit  breaches  of  the 
obligation  to  pay.  The  obhgation  to  pay  is  just  as  binding 
in  one  kind  of  a  contract  as  in  another  unless  it  is  waived, 
and  no  good  reason  exists  for  creating  an  exception  in 
favor  of  pubhc  contracts.  A  contractor  has  a  right  to  rely 
upon  the  expressed  obhgation,  and  if  the  pubhc  body  fails 
to  provide  in  its  contract  against  delay  in  payment  no 
different  rule  should  exist  in  its  favor.  When  there  is  a 
failure  to  make  periodical  payments  provided,  if  the  con- 
tractor does  not  elect  to  treat  such  failure  as  a  breach,  but 
continues  with  the  work  and  disregards  the  breach  so  far 
as  it  might  excuse  him  from  further  performance,  "he 
waives  it  and  may  not  later  assert  it  as  a  breach  when 
the  public  body  annuls  the  contract. ^ 

1  Jones  V.  New  York,  47  N.  Y.  App.  Div.  39. 
*  FarreUy  v.  U.  S.,  159  Fed.  671. 

434 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  304 

§  303.  Breach  During  Performance — Refusal  to  Accept 
Goods. 
Where  the  pubhc  body  refuses  to  accept  goods  which 
are  tendered  under  a  contract,  the  contractor  cannot  keep 
them  until  the  price  falls  or  if  they  are  perishable  until 
they  are  damaged  and  then  charge  the  loss.  He  must 
dispose  of  them  within  a  reasonable  time  after  the  breach. 
He  may  elect  to  keep  them  as  his  own  in  which  event  he 
can  recover  the  difference  between  the  contract  price  and 
the  market  price  at  the  time  of  the  breach.  Or  he  may 
elect  to  sell  them.  In  this  latter  case  he  must  sell  them 
within  a  reasonable  time,  giving  notice  of  his  intention  so 
to  do  to  the  public  body,  and  he  can  then  recover  the 
difference  between  the  contract  price  and  the  selling  price 
of  the  goods. ^ 

§  304.  Renunciation — Anticipatory  Breach. 

The  positive  refusal  to  perform  a  contract  is  a  breach  of 
it,  although  the  time  for  performance  has  not  arrived, 
and  UabiUty  for  the  breach  at  once  occurs."  The  measure 
of  damages  for  such  a  breach  is  the  difference  between 
the  contract  price  and  the  cost  of  performance.^  In  a 
mutually  executory  contract,  if  before  the  time  for  per- 
formance has  arrived  on  his  part,  one  of  the  parties 
notifies  the  other  that  he  will  not  perform  it,  the  other 
party  is  free  to  consider  himself  absolved  from  all  obliga- 
tion to  perform  the  agreement.    He  may  sue  at  once  for 

1  Hughes  V.  U.  S.,  4  Ct.  CI.  64;  Friedenstein  v.  U.  S.,  35  Ct.  CI.  1;  Guy  v. 
V.  S.,  25  Ct.  CI.  61;  Grover  v.  U.  S.,  5  Ct.  CI.  427,  3  Ct.  CI.  404. 

2  U.  S.  V.  PurceU  Envelope  Co.,  249  U.  S.  313,  63  L.  Ed.  620;  Roehm  v.  Horst, 
178  U.  S.  1,  44  L.  Ed.  953,  aff'g  91  Fed.  345;  Bridgeport  v.  Mtna.  Indem.  Co., 
91  Conn.  197,  99  Atl.  566;  Washington  County  v.  WilUama,  111  Fed.  801; 
Haye3  v.  Nashville,  80  Fed.  641. 

» U.  S.  V.  Purcell  Env.  Co.,  supra;  U.  S.  v.  Behan,  110  U.  S.  338,  28  L.  Ed. 
168. 

435 


§  304  ]  PERFORMANCE  AND  BREACH        [  PART  V 

all  damages  occasioned  by  the  anticipatory  breach,  or  if 
he  so  elects  he  may  treat  the  declaration  as  brutum 
fulmen  and  wait  for  the  time  of  performance  to  arrive, 
treating  the  contract  in  the  meantime  as  binding.  This 
rule  has  its  limitations.  It  only  apphes  to  contracts 
wliich  are  mutually  executory,  such  as  in  the  case  of  public 
contracts,  those  for  the  performance  of  work,  labor  and 
services  and  for  the  sale  and  deUvery  of  material  and 
supphes.  It  will  not  apply  to  money  contracts  purely 
where  one  party  has  fully  performed  his  imdertaking,  and 
there  only  remains  the  obligation  of  the  other  side  to  pay 
a  certain  sum  of  money  at  a  stated  time  or  times.  ^  Nor 
can  it  apply  to  even  a  contract  for  services  or  labor  which 
have  been  fully  performed  on  one  side  and  there  remains 
only  payment  therefor.  There  can  be  no  repudiation  or 
abandonment  of  a  contract  by  a  party  who  has  fully 
performed  it. 

If  a  contractor  is  to  manufacture  goods  or  fabricate  or 
improve  building  material,  and  during  the  process  of 
manufacture  or  improvement,  the  contract  is  repudiated, 
he  is  not  bound  to  complete  the  manufacture  or  continue 
the  improving  of  material,  and  estimate  his  damages  by 
the  difference  between  the  market  price  and  the  contract 
price,  but  the  measure  of  his  damages  is  the  difference 
between  the  contract  price  and  the  cost  of  perform- 
ance.2  In  order  to  give  effect  to  a  renunciation  it  must 
operate  to  breach  the  entire  contract  or  a  covenant  going 
to  the  whole  consideration  and  therefore  become  a  total 
breach.^ 

1  Wafihington  County  v.  Williams,  supra.  See  Hayes  v.  Nashville,  supra,-^ 
(really  a  case  of  services  with  indemnity  deposit  for  breach). 

2  U.  S  r;.  Purcell  Env.  Co.,  supra;  Hinckley  v.  Pittsburgh  B.  S.  Co.,  121  U.  S. 
264,  30  L.  Ed.  967;  Masterson  v.  Brooklyn,  7  Hill,  61. 

» Bridgeport  v.  Mtna.  ladem.  Co.,  supra. 

436 


CHAP.  XLVI  ]    PERFORMANCE  AND  BREACH  [  §  305 

§  305.  The  Same — Remedies. 

Where    one    party    repudiates    a    contract   and    refuses 
longer  to  be  bound  by  it,  the  injured  party  has  an  election 
to  pursue  either  of  three  remedies:  He  may  treat  the  con- 
tract as  rescinded,  and  recover  on  quantum  meruit  so  far 
as  he  has  performed;  or  he  may  keep  the  contract  alive 
for  the  benefit  of  both  parties,  being  at  all  times  himself 
ready  and  able  to  perform,  and  at  the  end  of  the  tune 
specified  in  the  contract  for  performance,  sue  and  recover 
imder  the  contract;  or  he  may  treat  the  repudiation  as 
putting  an  end  to  the  contract  for  all  purposes  of  perform- 
ance, and  sue  for  the  profits  he  would  have  reahzed  if  he 
had   not   been   prevented   from  performing.     In   the   last 
case  the  contract  would  be  continued  in  force  for  that 
purpose.    Where,  however,  the  injured  party  elects  to  keep 
the  contract  in  force  for  the  purpose  of  recovering  future 
profits,  treating  the  contract  as  repudiated  by  the  other 
party,  in  order  to  eventuate  such  recovery  the  party  suing 
must   allege   and   prove   performance   on   his   part,    or  a 
legal  excuse  for  non-performance.^     For,  ordinarily,  upon 
rescission   of  a   contract   the  recovery  is   hmited   to   the 
value  of  the  work  and  services  and  materials  furnished, 
and  damages  for  the  breach,  since  the  loss  of  expenditures 
or  of  profits  are  not  allowable.     Prospective  profits  are 
recoverable  only  where  the  contractor  is  prevented  from 
going  on,   either  by  some  affirmative  act  of  the  pubHc 
body,  as  being  ordered  to  desist  from  further  work,  or  by 
the  omission  to  perform  some  condition  precedent  to  the 
further  prosecution,  as  to  do  or  furnish  something  neces- 
sary to  its  further  progress.^     While  these  general  rules 

1  Lake  Shore  &  M.  S.  R.  Co.  v.  Richards,  152  111.  59,  38  N.  E.  773. 

2  U.  S.  V.  Behan,  110  U.  S.  338,  28  L.  Ed.  168;  Lake  Shore  &  M.  S.  R.  Co. 
V.  Richards,  supra. 

437 


§  305  ]  PERFORMANCE   AND    BREACH  [ PART  V 

apply  it  is  clear  upon  principle  and  authority  and  the  rule 
is  almost  universally  recognized  that  where  one  party  to 
an  executory  contract  refuses  to  treat  it  as  subsisting  and 
binding  upon  him,  or  by  his  act  and  conduct  shows  that  he 
has  renounced  it  and  no  longer  considers  himself  bound 
by  it,  there  is,  in  legal  effect,  a  prevention  of  performance 
by  the  other  party.  ^  There  must  not  necessarily  be 
physical  prevention.  Any  acts,  conduct  or  declarations 
evincing  a  clear  intention  to  repudiate  the  contract,  and 
to  treat  it  as  no  longer  binding,  are  a  legal  prevention  of 
performance  by  the  other  party.-  And  it  can  make  no 
difference  whether  the  contract  has  been  partially  per- 
formed, or  the  time  for  performance  has  not  yet  arrived; 
nor  is  it  important  whether  the  renunciation  be  by  declara- 
tion of  the  party  that  he  will  no  longer  be  bound,  or  by 
acts  and  conduct  which  clearly  evince  that  the  determina- 
tion has  been  reached  and  is  being  acted  upon.  The  mere 
declaration  of  the  party  of  an  intention  not  to  be  bound, 
or  acts  and  conduct  in  repudiation  of  the  contract  will 
not,  of  themselves,  amount  to  a  breach  so  as  to  create  an 
effectual  renunciation  of  the  contract;  for  one  party  can- 
not, by  any  act  or  declaration,  destroy  the  binding  force 
and  efficacy  of  a  contract.  It  gives,  however,  to  the 
other  party  the  right  to  elect  to  treat  it  as  brutum  fulmen 
or  as  a  final  assertion  of  his  adversary  not  to  be  bound 
longer  by  the  contract,  and  a  wrongful  renunciation  of  the 
contractual  obligations.  In  event  of  the  latter  election,  it 
becomes  a  breach  and  he  can  recover  upon  it  as  such.'' 
Upon  election  to  treat  the  renunciation,  whether  by 
declaration  or  acts  and  conduct  as  a  breach  of  the  con- 
tract,  the   rights  of   the  parties  are   then   fixed  and   the 

1  Christian  County  v.  Overholt,  18  111.  223. 

*  Lake  Shore  &  M.  S.  R.  Co.  v.  Richards,  supra.  *  Idem. 

438 


CHAP.  XLVI  ]  PERFORMANCE   AND    BREACH  [  §  306 

contract  relation  ceases  to  exist,  except  for  the  purpose  of 
maintaining  an  action  for  the  recovery  of  damages. 
Anticipatory  breach  thus  gives  rise  to  an  immediate  cause 
of  action,  even  though,  as  that  term  implies,  the  time  for 
performance  has  not  arrived.^  Even  upon  grounds  of 
convenience  or  expediency,  which  of  course  however  just 
or  equitable  cannot  be  made  the  basis  of  judicial  decision, 
such  a  rule  commends  itself.  For  it  is  inequitable  and 
without  purpose  to  require  one  party  to  continue  to 
perform,  notwithstanding  repudiation  by  the  other.  The 
damages  are  greatly  enhanced  and  the  injured  party 
always  has  the  hazard  of  his  adversary's  insolvency.  It 
is  more  reasonable  and  just,  upon  a  repudiation  by  one 
party,  to  permit  the  other  party  to  cease  performance, 
stop  expenditure,  and  thus  curtail  damages,  and  to  allow 
recovery  once  for  all  of  the  damages  that  the  injured  party 
will  sustain  through  non-performance  by  the  other;  the 
locus  pcenitentise  being  kept  open  until  the  injured  party 
elects  to  treat  the  contract  as  abandoned  by  the  other  and 
brings  suit  as  for  non-performance. - 

§  306.  The  Same — Failure  to  Make  Installment  Delivery 
or  Payment  Under  a  Contract. 

Not  every  refusal  or  omission  of  one  party  to  do  some- 
thing which  he  ought  to  do  will  justify  the  other  in  re- 
pudiating the  contract.  There  must  be  an  absolute  refusal 
to  perform  his  part  of  the  contract.  It  is  a  clearly  recog- 
nized principle  that  if  there  is  only  a  partial  failure  of 
performance  by  one  party  for  which  there  may  be  com- 
pensation in  damages  the  contract  is  not  ended.  There  is 
no  absolute  rule  which  can  be  laid  down  in  express  terms 

'  Lake  Shore  &  M.  S.  R.  Co.  v.  Richards,  supra;  U.  S.  v.  Purcell  Envelope  Co., 
249  U.  S.  313,  63  L.  Ed.  620. 

'^  Lake  Shore  &  M.  S.  R.  Co.  v.  Richards,  supra, 

439 


§  306  ]  PERFORALA-NCE   AND   BREACH  [  PART  V 

as  to  when  a  breach  of  contract  on  one  side  exonerates 
the  other  from  performance  of  his  part  of  the  contract. 
"WTiere  a  contract  is  for  delivery  of  goods  in  instalhnents 
and  instalhnent  payments  are  provided  for,  parties  often 
treat  a  refusal  to  pay  as  a  breach  and  abandonment  of 
the  contract  and  decline  to  deliver  more.  And  where  one 
installment  of  deliveries  is  not  made,  the  party  bound  to 
receive  deliveries  refuses  to  receive  any  subsequent  in- 
stallments asserting  a  breach  and  termination  of  the  con- 
tract from  failure  to  deliver  one  installment.  The  rights 
of  the  parties  arising  from  such  acts  and  conduct  are  not 
easy  of  adjustment  and  decision,  and  each  case  is  to  be 
determined  from  the  particular  circumstances  involved. 
Clearly  if  one  party  states  that  he  will  not  pay  for  any  of 
the  deliveries,  such  would  be  a  total  breach  and  the  seller 
would  be  no  longer  bound  to  dehver.  Whether  mere  non- 
pajTiient  on  one  hand  or  non-delivery  on  the  other  will 
amount  to  a  repudiation  or  abandonment  of  the  contract 
which  will  justify  a  termination  of  the  contract  by  the 
other  party,  depends  on  whether  such  act  evinces  an  in- 
tention to  wholly  abandon  the  contract,  to  no  longer  be 
bound  by  it  and  set  the  other  party  free,  and  this  is 
usually  a  question  of  fact  to  be  answered  by  a  jury.  Non- 
delivery of  a  single  installment  will  not  necessarily  inti- 
mate that  the  party  not  delivering  does  not  intend  to  be 
any  longer  bound,  but  in  particular  contracts  and  under 
particular  circumstances  it  might  be  sufficient.  The  same 
is  true  of  non-payment.  A  single  failure  to  make  an 
installment  payment  is  of  itself  not  necessarily  evidence 
of  an  intention  no  longer  to  be  bound  by  the  contract,  but 
other  circLUTLstances  would  justify  a  court  in  drawing  such 
inference  even  from  a  single  failure  to  pay  one  installment. 
Ordinarily  defaults  by  one  in  making  particular  payments, 

440 


CHAP.  XLVI  ]    PERFORMANCE  AND  BREACH  [  §  306 

deliveries  or  acceptances  of  deliveries  will  not  release  the 
other  party  from  his  duty  to  make  the  other  dehveries  or 
payments  or  acceptances  stipulated  in  the  contract  unless 
the  conduct  of  the  party  in  default  evinces  an  intention  to 
abandon  the  contract,  or  a  design  no  longer  to  be  bound 
by  its  terms.  The  reason  for  the  rule  is  that  a  party  com- 
plaining of  a  breach  under  the  circumstances  should  be 
required  to  rely  upon  the  normal  principle  of  compensa- 
tion to  recompense  him  and  not  be  permitted  to  reap  the 
abnormal  advantage  which  might  come  to  him,  by  reason 
of  changes  in  market  conditions,  from  an  option  to  rescind 
or  repudiate  the  bargain.  In  the  absence  of  any  expression 
of  intention  in  such  a  contract,  it  will  be  deemed  that  a 
contract  for  the  sale  of  goods  by  successive  deliveries  is 
severable,  and  the  failure  to  accept  or  deliver  one  in- 
stallment will  not  entitle  the  other  party  to  refuse  dehvery 
or  acceptance  of  the  installments  that  remain.  Parties 
may  by  appropriate  language  make  each  delivery,  or  each 
installment  of  payment,  a  condition  precedent  to  further 
continuance  of  the  contract.  In  such  a  case  the  contract 
might  properly  be  terminated  by  the  party  aggrieved.  In 
like  manner  if  by  the  non-delivery  of  part  of  the  goods 
contracted  for  the  whole  object  of  the  contract  is  defeated, 
the  party  making  default  renounces  on  his  part  all  the 
obligations  of  the  contract.  Where  the  question  arises  as 
to  whether  the  non-delivery  or  the  non-payment  amounts 
to  an  abandonment  of  the  contract  or  a  refusal  to  perform 
it  by  the  person  in  default  and  whether  the  acts  and 
conduct  of  the  parties  evince  an  intention  no  longer  to  be 
bound  by  it,  questions  of  abiUty,  solvency  and  intention 
enter  into  its  determination  by  a  jury.  Sometimes  the 
act  of  terminating  a  contract  by  the  one  injured  by 
default  in  non-delivery  or  non-payment  is  spoken  of  as  a 

441 


§  306  ]  PERFORMANCE   AND   BREACH  [  PART  V 

rescission,  but  a  rescission  of  a  contract,  strictly  speaking, 
can  only  be  accomplished  by  the  mutual  agreement  of  the 
parties.  Such  termination  is  rather  to  be  viewed  as  the 
right  of  one  party  to  treat  a  wrongful  repudiation  of  the 
contract  by  the  other  party  as  a  complete  renunciation 
of  it.    See  note  Infra. 

§  307.  Renunciation  of  Continuing  Contract. 

Where  a  continuing  contract  has  not  been  fully  per- 
formed on  either  side,  the  repudiation  of  the  contract  by 
one  party,  or  his  refusal  of  further  performance,  will 
authorize  the  other  party  to  treat,  the  contract  as  at  an 
end,  and  will  give  to  the  latter  a  right  of  action  for  dam- 
ages for  its  breach.  The  injured  party  will  not  be  con- 
fined to  the  contract  price  for  work  done  and  materials 
received  under  the  contract  but  may  recover  the  entire 
damages  resulting  from  the  breach  in  terminating  the  con- 
tract. The  innocent  party  if  he  be  the  contractor  is  not 
bound  to  go  on  manufacturing,  or  improving  material  for 
the  work  as  a  condition  precedent  to  obtaining  the  proper 
relief,  and  depend  upon  getting  the  difference  between  the 
market  value  and  the  contract  price.  He  may  do  this  at 
the  risk  of  finding  no  market  for  it,  or  of  being  unable  to 
collect  the  amount  that  might  become  due.  The  law  is 
not  so  unreasonable.     He  has  the  right  to  treat  the  re- 

NoTE. — No  decisions  involving  public  contracts  have  been  found  directly 
on  the  questions  here  considered  and  no  citations  therefore  are  available.  For 
cases  arising  between  private  individuals  involving  the  questions,  see  Norring- 
ton  V.  Wright,  115  U.  S.  188,  29  L.  Ed.  366;  U.  S.  v.  Smoot,  82  U.  S.  (15  Wall.) 
36,  21  L.  Ed.  107;  Lake  Shore  &  M.  S.  R.  Co.  v.  Richards,  152  111.  59;  West 
V.  Bechtel,  125  Mich.  144,  84  N.  W.  69;  Gerli  ;;.  Poidebard  Silk  Mfg.  Co.,  57 
N.  J.  L.  432,  31  Atl.  401;  Blackburn  v.  Reilly,  47  N.  J.  L.  290,  1  Atl.  27,  54 
Am.  Rep.  159.    See  English  cases  cited  in  American  cases. 

The  rule  in  New  York  has  been  to  the  effect  that  non-delivery  of  a  single 
installment  was  ground  for  rescission.  This  rule  has  been  superseded  by  the 
Personal  Property  Law,  §  126,  and  even  the  sale  of  water  by  a  municipahty 
is  a  sale  within  this  statute. 

442 


CHAP.  XLVI  ]    PERFORMANCE  AND  BREACH  [  §  308 

pudiation  as  a  total  breach  of  an  entire  contract,  and  to 
sue  immediately  and  recover  at  one  time  all  the  damages 
resulting  from  it,  without  waiting  for  the  time  for  full 
performance,  to  elapse.^  If  one  party  voluntarily  disables 
himself  or  puts  it  out>  of  his  power  to  perform  before  the 
time  of  performance  arrives  or  further  perform  during  the 
time  of  performance,  the  other  party  has  an  immediate  right 
of  action  for  all  damages  occasioned  by  this  breach.  ^  The 
same  result  is  reached  where  a  party  prevents  performance 
by  the  other,  and  the  injured  party  is  entitled  to  a  recovery 
based  upon  the  same  measure  of  damages.^ 

§  308.  Performance — Breach — Abandonment — When  Jus- 
tified. 

In  these  instances  of  breach  of  contract  which  have 
been  adverted  to  in  the  foregoing  sections,  it  is  pointed  out 
that  a  breach  of  contract  gives  the  party  injured  by  it  the 
privilege  of  refusing  to  further  proceed  and  of  abandoning 
the  contract.  A  breach  which  will  justify  abandonment 
must  be  of  a  material  term  of  the  contract,  one  which  the 
parties  looked  upon  as  a  condition  precedent  to  further 
continuance  of  performance.  It  must  go  to  the  substance 
of  the  contract.  Not  every  act  or  omission  of  a  party  will 
permit  the  other  party  to  repudiate  and  end  the  contract. 
Breaches  of  this  character  amounting  to  a  partial  failure  of 

1  Masterson  v.  Brooklyn,  7  Hill,  61;  Clark  v.  Mayor,  4  N.  Y.  338;  Jones  v. 
Judd,  4  N.  Y.  411;  Devlin  v.  Mayor,  63  N.  Y.  8;  Lord  v.  Thomas,  64  N.  Y. 
107;Royalton  v.  Royalton  &  W.  T.  Co.,  14  Vt.  311;  Seaton  v.  Second  Munic- 
ipality, 3  La.  Ann.  45;  Chicago  v.  Tilley,  103  U.  S.  146,  26  L.  Ed.  371. 

2  Bridgeport  v.  Mtna  Indem.  Co.,  91  Conn.  197,  99  Atl.  566;  Beckwith  v. 
New  York,  121  N.  Y.  App.  Div.  462;  Masterson  v.  Hill,  supra;  James  v. 
Allen  County,  44  Ohio  St.  226,  6  N.  E.  246;  Royalton  v.  Royalton  &c.  T.  Co., 
14  Vt.  311;  Oilman  v.  Lamson  County,  234  Fed.  507;  U.  S,  v.  Purcell  Envelope 
Co.,  249  U.  S.  313,  63  L.  Ed.  620. 

=•  Long  Island  Cont.  &  S.  Co.  v.  New  York,  204  N.  Y.  73, 97  N.  E.  483;  Lord 
V.  Thomas,  64  N.  Y.  107;  Parr  v.  VU.  of  Greenbush,  112  N.  Y.  246;  Danolda 
V.  State,  89  N.  Y.  36. 

443 


§  308  ]  PERFORMANCE   AND   BREACH  [  PART  V 

performance  and  relating  to  covenants  and  stipulations  of 
the  contract  which  are  not  in  the  nature  of  conditions  pre- 
cedent are  to  be  compensated  in  damages  for  which  an  ac- 
tion may  be  brought.  But  if  the  breach  goes  to  the  sub- 
stance of  the  contract,  an  abandonment  is  justified  and 
immediate  suit  may  be  brought  for  the  entire  damage.^ 
Not  every  unfounded  or  illegal  claim  a  party  may  make 
during  the  prosecution  of  a  large  contract  will  justify  the 
other  in  abandoning  the  contract  as  for  a  breach. 

If  claims  are  made  under  rights  reserved  by  the  contract 
and  these  are  mitenable  and  erroneous,  there  is  never- 
theless a  locus  poenitentise,  some  reasonable  time  allowed 
to  a  party  making  such  a  claim  to  become  aware  that  he 
is  in  error  and  recede  from  his  position.  It  is  only  where 
he  shows  an  imwillingness  to  carry  out  his  contract  or  such 
reasonable  time  elapses  and  his  erroneous  attitude  is  not 
changed  that  abandonment  is  justified.^  A  slight  or  partial 
neglect  to  observe  some  of  the  terms  or  conditions  of  a  con- 
tract will  not  justify  a  rescission  or  abandorunent.^  In 
cases  where  abandonment  occurs  and  the  contract  is  termi- 
nated, although  the  injured  party  declares  that  he  has 
annulled  or  cancelled  the  contract,  this  will  not  have  the 
technical  effect  of  a  rescission  and  release  each  party  from 
every  obligation  of  the  contract  as  if  it  had  never  been 
made.  There  is  a  mode  of  abandoning  a  contract  as  a  live 
and    enforceable  obligation,  which  still  entitles  the  party 

»  U.  S.  V.  Behan,  110  U.  S.  338,  28  L.  Ed.  168;  U.  S.  v.  Purcell  Env.  Co.,  249 
U.  S.  313,  63  L.  Ed.  620;  Guerini  Stone  Co.  v.  Carlin  Cons.  Co.,  248  U.  S.  334, 
63  L.  Ed.  275;  Greenlee  County  v.  Cotey,  17  Ariz.  542,  155  Pac.  302;  Feet  v. 
East  Grand  Forks,  101  Minn.  518,  112  N.  W.  1003;  Long  Island  Cont.  &  S. 
Co.  V.  New  York,  204  N.  Y.  73,  97  N.  E.  483;  Elgin  v.  Joslyn,  136  111.  525,  26 
N.  E.  1090. 

2  National  Cont.  Co.  v.  Hudson  Riv.  W.  P.  Co.,  192  N.  Y,  209,  84  N.  E. 
965. 

»  Elgin  V.  Joslyn,  supra. 

444 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  309 

declaring  its  abandonment  to  look  to  the  contract  to  deter- 
mine the  damages  to  which  he  is  entitled  mider  it  for  the 
breach  which  gave  him  the  right  of  abandonment.^  A 
notice  of  annullment  under  the  circmnstances  means  simply 
that  the  pubHc  body  will  proceed  no  further  with  the  con- 
tractor imder  the  contract,  not  that  the  contract  is  re- 
scinded or  avoided.  The  obhgations  of  the  contract,  so 
far  as  they  apply  to  a  default,  remain  in  full  vigor.  The 
public  body  has  the  right,  unless  some  other  measure  of 
damage  is  provided,  to  let  the  work  of  completion  to 
another  contractor  and  to  charge  the  original  contractor 
with  the  reasonable  difference  in  cost.^ 

§  309.  Executory   Contract — Making  New  and   Modified 
Contract — Consideration. 

When  a  party  to  an  executory  contract  breaches  it  by 
refusing  to  perform  except  upon  the  payment  of  additional 
compensation,  it  is  optional  with  the  adverse  party  to  sue 
him  for  damages,  or  waive  the  breach,  treat  the  contract  as 
abrogated  and  enter  into  a  new  contract  with  the  default- 
ing party.  If  the  innocent  party  elects  not  to  hold  him 
answerable  in  damage  but  because  of  the  importance  to 
him  that  the  work  should  be  done  makes  a  new  contract, 
he  cannot  be  heard  to  say  that  it  is  without  consideration. 
The  abandormaent  of  the  old  contract  and  the  making  of 
the  new  promises,  one  for  the  other  in  the  new  contract, 
constitute  a  sufficient  consideration.  The  mutual  releases 
from  the  obligations  of  the  original  agreement  also  furnish 
a  basis  to  support  the  new  contract.  If,  therefore,  in  the 
new  agreement  the  innocent  party  in  order  to  derive  the 

1  Hayes  v.  Nashville,  80  Fed.  641;  U.  S.  v.  McMullen,  222  U.  S.  460,  56 
L.  Ed.  269. 

2  U.  S.  V.  McMullen,  222  U.  S.  460,  56  L.  Ed.  269;  U.  S.  v.  O'Brien,  220 
U.  S.  321,  55  L.  Ed.  481,  aff'g  163  Fed.  1022. 

445 


§  309  ]  PERFORMANCE   AND   BREACH  [  PART  V 

benefits  of  performance  makes  new  and  additional  promises 
to  the  defaulting  party,  and  he  in  consideration  of  the 
promises  completes  the  work,  the  promises  will  bind.^ 

§  310.  Effect  of  Breach. 

When  a  contractor  abandons  a  public  construction  or 
building  contract  or  even  a  contract  for  personal  service 
without  excuse  or  justification,  the  general  rule  is  that 
where  the  contract  is  entire,  and  contracts  of  this  char- 
acter are  usually  regarded  as  entire,  there  can  be  no 
recoveiy.^  Even  if  there  has  been  a  substantial  perform- 
ance by  the  contractor  where  the  abandonment  is  willful, 
or  there  has  been  a  willful  and  intentional  deviation  from 
the  terms  of  the  contract,  the  contractor  is  without 
remedy.^  For  a  substantial  compliance  resulting  from  a 
bona  fide  intention  to  perform  the  contract,  the  contractor 
is  permitted  to  bring  an  action  and  may  have  the  contract 
price  less  a  deduction  for  the  value  of  the  part  unfinished. 
Neither  is  the  public  body  liable  for  partial  performance 
of  a  contract  unless  it  accepts  the  benefits  of  such  partial 
performance.  This,  however,  means  an  intentional  accept- 
ance from  which  would  arise  an  implied  promise  to  pay 
for  the  value  of  such  benefits.  The  acceptance  rule  can- 
not be  held  to  apply  to  those  cases  where  a  public  body  is 
forced  to  accept  the  benefits,  as  where  its  bridge  is  repaired 
or  its  land  or  streets  are  improved  and  it  is  impossible  to 
return  what  has  been  received.  There  must  be  a  voluntary 
retention  of  the  benefits.^ 

1  Long  V.  Pierce  County,  22  Wash.  330,  61  Pac.  142;  Dyer  v.  Middle  Kittitas 
Irrig.  Dist.,  25  Wash.  94,  64  Pac.  1009;  Peet  v.  East  Grand  Forks,  101  Minn. 
618,  112  N.  W.  1003;  Bader  v.  New  York,  51  Misc.  358.  See  Admiral  Realty 
Co.  V.  New  York,  206  N.  Y.  110,  99  N.  E.  241.    See  §  §  97,  165,  ante. 

2  Poynter  v.  U.  S.,  41  Ct.  CI.  443;  Clark  v.  Sch.  Dist.,  29  Vt.  217. 
'Dermott  v.  Jones,  2  Wall.  (U.  S.)  1,  17  L.  Ed.  762. 

*  Douglas  V.  Lowell,  194  Mass.  268,  80  N.  E.  510. 

446 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [§311 

Sometimes  the  further  completion  of  the  work  and  mak- 
ing use  of  the  abandoned  work  will  give  rise  to  an  action 
on  quantum  meruit,  but  not  where  the  cost  of  completion 
exceeds  what  was  due.^ 

§  311.  The  Same— Willful  Breach. 

On  the  other  hand,  the  willful  or  intentional  breach  of  the 
contract  by  the  pubUc  body  of  its  contract  affords  the 
contractor  the  right  to  a  recovery  of  the  value  of  his  con- 
tract. Where  the  breach  consists  in  preventing  the 
performance  of  the  contract,  without  fault  of  the  other 
party  who  is  willing  to  perform  it,  the  contractor  may 
recover  what  he  has  already  expended  towards  performance, 
together  with  the  profits  which  he  would  realize  had  he 
been  allowed  to  perform.^ 

Of  course,  when  the  party  injured  by  the  stoppage  of  a 
contract  elects  to  rescind  it,  then  he  cannot  recover  any 
damages  for  a  breach  of  the  contract,  either  for  outlay  or 
for  loss  of  profits.  The  recovery  is  then  for  the  value  of  his 
services  actually  performed  as  upon  a  quantum  meruit  and 
no  question  of  losses  or  of  profits  enters  into  it.^ 

Where  the  contractor  voluntarily  and  willfully  fails  to 
complete  a  work  or  structure  to  be  done  under  a  special 
contract  for  an  entire  sum,  he  is  without  any  remedy.  This 
rule  apphes  even  in  the  case  of  a  willful  default  in  the 
performance  of  a  stipulation  or  covenant  not  going  to  the 
essence  of  the  contract.  Any  recovery  permitted  is  re- 
stricted to  an  honest  and  bona  fide  intention  to  follow  the 

1  Winamac  Sch.  Dist.  v.  Hess,  151  Ind.  229,  50  N.  E.  81. 

2  U.  S.  V.  Behan,  110  U.  S.  338,  28  L.  Ed.  168;  Clark  v.  Mayor,  4  N.  Y.  338; 
Devlin  v.  New  York,  63  N.  Y.  8;  Long  Island  Cont.  &  S.  Co.  v.  New  York,  204 
N.  Y.  73,  97  N.  E.  483;  Cranford  Co.  v.  New  York,  150  N.  Y.  App.  Div.  195, 
211  N.  Y.  534,  105  N.  E.  1082. 

3  U.  S.  V.  Behan,  supra;  Clark  v.  Mayor,  4  N.  Y.  338.  But  see  Carlin  v.  New 
York,  132  N.  Y.  App.  Div.  90. 

447 


§311]         PERFORMANCE  AND  BREACH        [  PART  V 

contract.  Contractors  have  no  right  to  break  contracts 
and  claim  the  contract  price.  Where  the  failure  to  perform 
is  intentional  it  is  such  bad  faith  as  admits  of  no  recovery.^ 
Where  a  contract  is  to  erect  a  building  for  an  entire  sum 
to  be  paid  in  installments  as  the  work  progresses,  where  the 
contractor  willfully  refuses  to  complete,  this  entitles  the 
public  body  to  a  repayment  of  all  installments  received  by 
the  contractor.  Interest  may  be  allowed  on  the  install- 
ments from  the  time  when  under  the  contract  the  work 
should  have  been  completed,  and  this  rule  as  to  interest  is 
not  affected  by  a  delay  in  bringing  suit.^  But  the  question 
as  to  whether  there  has  been  willful  and  intentional  failure 
to  perform  a  contract  is  usually  a  question  of  fact^ 
although  under  some  circumstances  it  might  be  resolved 
as  a  question  of  law.  A  refusal  to  install  ventilators  in  a 
school  building  is  not  wilful  and  intentional  as  matter  of  law, 
were  a  contractor  first  figured  the  cost  from  a  picture  of 
the  school  building  which  did  not  show  them,  and  where, 
when  he  was  shown  plans  and  specifications  which  included 
them  he  stated  that  he  had  not  figured  on  them  and  was 
told  by  a  trustee  who  principally  had  charge  of  the  erection 
that  he  might  omit  them.  A  jury  would  be  justified  in 
finding  that  he  omitted  them  in  good  faith  and  that  their 
absence  was  not  a  structural  defect  rendering  the  building 
less  substantial,  since  they  could  easily  be  supplied  after 
the  building  was  erected.^  But  if  the  contract  is  divisi- 
ble, the  volimtary  abandonment  of  it  will  not  preclude  a 
recovery  for  so  much  as  has  been     performed     less     such 

1  Bonesteel  v.  Mayor,  22  N.  Y.  162;  Tompkins  v.  Dudley,  25  N.  Y.  272; 
Homer  v.  Shaw,  177  Mass.  1,  58  N.  E.  160;  Homer  v.  Shaw,  212  Mass.  113, 
98  N.  E.  697. 

2  U.  S.  V.  U.  S.  F.  &  G.  Co.,  236  U.  S.  512,  59  L.  Ed.  696;  Tompkins  v, 
Dudlej',  supra. 

3  Smith  V.  RusseU,  140  N.  Y.  App.  Div.  102. 
*  Idem. 

448 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  313 

damages  as  the  other  party  suffers  from  the  breach   which 
he  may  justly  counterclaim. 

§  312.  Rescission  for  Breach. 

The  right  to  rescind  a  contract  is  an  extreme  right,  and 
its  exercise  will  not  be  warranted  by  every  breach.  The 
existence  of  the  right  cannot,  however,  be  denied  or  its 
exercise  refused  where  a  contract  is  entire,  and  is  broken  by 
either  party  in  matter  of  time  or  in  the  manner  of  perform- 
ance from  the  inception  of  carrying  it  out.^  But  where  the 
contract  is  divisible  or  is  made  up  of  several  distinct  and 
similar  acts  to  be  separately  and  successively  performed, 
the  right  to  rescind  depends  upon  whether  the  conduct  of 
the  party  in  default  shows  an  intention  to  abandon  or  no 
longer  be  bound  by  the  contract.  And  the  failure  to  per- 
form must  be  of  such  a  character  that  it  defeats  the  very 
object  of  the  contract. 

A  slight  or  partial  neglect  to  follow  some  term  or  condi- 
tion will  not  justify  rescission.^ 

§  313.  Prevention  of  Performance — Direction  to  Discon- 
tinue Work. 

A  contractor  cannot  compel  a  public  body  to  continue 
in  the  work  of  construction  of  a  building  or  other  structures. 
A  public  body,  just  as  an  individual  may  abandon  an  en- 
terprise which  it  has  undertaken  and  refuse  to  allow  a 
contractor  to  proceed;  it  may  make  a  new  contract 
or  complete  the  work  itself  without  there  being  any  default 
on  the  part  of  the  contractor.  But  while  it  is  free  to  vio- 
late the  contract,  while  it  may  refuse  to  perform  or  arrest 
performance  it  can  in  no  way  destroy  or  get  rid  of  the 
obligation  of  the  contract.     The  original  contractor  has 

1  Norrington  v.  Wright,  115  U.  S.  188,  29  L.  Ed.  366,  aff'g  5  Fed.  768. 

2  Elgin  V.  Joslyn,  136  lU.  525,  26  N.  E.  1090. 

449 


§  313  ]  PERFORMANCE  AND  BREACH        [  PART  V 

his  claim  for  damages  which  in  the  case  of  the  State  or 
nation  the  legislature  or  Congress  would  doubtless  recog- 
nize or  in  those  instances  where  the  right  to  sue  has  been 
conferred,  the  contractor  may  sue  and  recover  his  damages 
including  prospective  profits  where  the  public  body  pre- 
vents performance.^  While  the  contract  is  executory,  a 
public  body  has  the  power  to  stop  performance  on  the 
other  side  by  an  explicit  direction  to  that  effect,  subjecting 
itself  to  such  damages  as  will  compensate  the  contractor 
for  being  stopped  in  the  performance  on  his  part  at  that 
particular  stage  of  the  work.  The  party  thus  forbidden  cannot 
go  on  afterwards  and  increase  the  damage.  In  such  case  the 
just  claims  of  the  contractor  are  satisfied  when  he  is  fully 
recompensed  for  his  part  performance  and  indemnified  for  his 
loss  in  respect  to  the  part  left  unexecuted.  The  refusal  to  per- 
mit further  performance  is  not  a  rescission  of  the  contract,  but 
simply  a  breach  for  which  in  an  appropriate  action  he  is 
entitled  to  recover  these  damages.- 

Where  the  contract  is  partly  performed  and  the  con- 
tractor is  prevented  from  completing  the  remainder,  the 
contractor  is  entitled  to  the  contract  price  for  the  part 
which  he  has  performed  in  accordance  with  the  contract 
rate,  and  he  is  entitled  to  damages  for  being  prevented  from 
completing  the  remainder  of  the  contract.^    Consequently 


1  Lord  V.  Thomas,  64  N.  Y.  107;  Danolda  v.  State,  89  N.  Y.  36,  42  Am.  Rep. 
277;  Parr  v.  Greenbush,  112  N.  Y.  246,  19  N.  E.  684. 

2  Nebraska  City  v.  Nebraska  City  G.  L.  &  C.  Co.,  9  Neb.  339,  2  N.  W.  870. 
» Cranford  Co.  v.  New  York,  150  N.  Y.  App.  Div.  195,  211  N.  Y.  534,  105 

N.  E.  1082;  Kehoe  v.  Rutherford,  56  N.  J.  L.  23,  27  Atl.  912;  Harrison  v. 
Clarke,  78  N.  J.  L.  236,  73  Atl.  43;  Kenwood  Bridge  Co.  v.  Dunderdale,  50 
111.  App.  581;  Rittenhouse  v.  Baltimore,  25  Md.  336,  Clark  v.  New  York,  4 
N.  Y.  338,  53  Am.  Dec.  379;  Guerini  Stone  Co.  v.  Carlin  Cons.  Co.,  240  U. 
S.  264,  60  L.  Ed.  636;  United  States  v.  Behan,  110  U.  S.  338,  28  L.  Ed.  168 
U.  S.  V.  Smith,  94  U.  S.  214,  24  L.  Ed.  115,  aff'g  11  Ct.  CI.  707;  Kellogg  B. 
Co.  ".  U.  S.,  15  Ct.  CI.  206;  Ferris  v.  U.  S.,  28  Ct.  CI.  332;  Harvey  v.  U.  S.,  8 
Ct.  CI.  501.      See  Carlin  v.  New  York,  132  N.  Y.  App.  Div.  90. 

450 


CHAP.  XLVI  ]  PERFORMANCE   AND    BREACH  [  §  314 

the  items  which  chiefly  make  up  this  loss,  the  outlays 
which  were  reasonably  made  in  preparing  for  performance 
and  the  expected  profits  which  were  to  be  gained  from 
performance,  are  elements  of  damage  and  are  recoverable 
as  such.^  In  addition  to  these  chief  items  of  loss  he  may 
recover  such  other  items  as  are  included  in  his  special  loss. 
For  instance,  he  may  recover  a  fair  allowance  for  his  own 
time,"  and  where  he  has  brought  material  to  the  site  or  has 
it  on  hand  for  the  contract,  he  may  have  any  loss  that  has 
resulted  to  him  thereon.  Where  the  expense  connected 
with  getting  ready  to  perform  is  about  the  same  as  actual 
performance,  he  may  recover  from  the  public  body  the  con- 
tract price.  ^ 

§  314.  Stopping   Work   Because    of   Dissatisfaction   with 
Progress. 

Where  a  public  contract  provides  that  if  the  engineer 
shall  be  of  the  opinion  and  shall  so  certify  in  writing  to  the 
public  body  or  officer,  that  the  performance  of  the  contract 
is  unnecessarily  or  unreasonably  delayed,  the  contract  may 
be  cancelled,  this  does  not  confer  upon  the  engineer  the 
right  to  cancel  it  at  his  option.^  The  matter  is  one  of  dis- 
cretion, and  the  discretion  is  one  which  depends  upon  his 
honest  judgment.  If,  therefore,  he  forms  his  opinion, 
capriciously  or  arbitrarily  without  regard  to  the  facts,  his 

>  Beattie  v.  N.  Y.,etc.,  Cons.  Co.,  196  N.  Y.  346,  89  N.  E.  831;  Long  Island 
Cont.  Co.  V.  New  York,  204  N.  Y.  73,  97  N.  E.  483;  Danolds  v.  State,  89  N.  Y. 
36,  42  Am.  Rep.  277;  Dailey  v.  New  York,  170  N.  Y.  App.  Div.  267,  218  N.  Y. 
665,  113  N.  E.  1053;  Beckwith  v.  New  York,  121  N.  Y.  App.  Div.  462;  U.  S. 
V.  Behan,  supra;  Guerini  Stone  Co.  v.  Carlin  Cons.  Co.,  supra;  Houston  Cons. 
Co.  V.  U.  S.,  38  Ct.  CI.  724;  Ferris  v.  U.  S.,  28  Ct.  CI.  332. 

2  U.  S.  V.  Behan,  supra;  Houston  Cons.  Co.  v,  U.  S.,  supra;  Taylor  v.  Spencer, 
75  Kan.  152,  88  Pac.  544. 

3  Hardy  v.  U.  S.,  9  Ct.  CI.  244. 

*  Wakefield  Cons.  Co.  v.  New  York,  157  N.  Y.  App.  Div.  535,  213  N.  Y. 
633,  107  N.  E.  1087;  Smith  Cont.  Co.  v.  New  York,  167  N.  Y.  App.  Div.  263. 

451 


§  314  ]  PERFORMANCE   AND   BREACH  [  PART  V 

certificate  is  not  made  in  good  faith,  and  is  not  binding  or 
conclusive.^  The  contractor  is  then  entitled  to  show  the' 
facts  and  have  a  determination  by  a  jury  as  to  whether) 
there  are  any  facts  upon  which  the  judgment  of  the  engi- 
neer could  be  based,  or  where  he  rehes  upon  the  reports  of 
subordinates  or  others,  whether  the  facts  are  misrepre- 
sented to  him.-  If  reports  to  him  are  untrue  or  inadequate, 
and  he  rehes  upon  them  without  personal  investigation,  no 
matter  how  implicitly  he  beheves  them,  his  certificate  can- 
not be  conclusive.^  When  only  one-fifth  of  the  contract 
time  has  expired,  most  of  it  during  a  severe  winter,  and  a 
considerable  amount  of  work  has  been  actually  performed 
and  no  facts  are  showTi  which  justify  the  engineer's  con- 
clusion, but  it  appears  that  the  real  reason  is  not  that 
the  contractor  has  failed  to  proceed  with  due  diligence 
down  to  the  time  of  termination,  but  rather  that  he  was 
not  ready  to  prosecute  the  work  with  sufficient  speed  when 
the  contract  was  terminated,  the  jury  may  find  that  the 
opinion  was  arbitrary  and  not  based  upon  an  honest 
consideration  of  the  facts. ^  The  contractor  cannot  be 
deprived  of  the  opportunity  to  complete  his  contract  until 
the  conditions  provided  by  contract  for  cancellation  are 
fulfilled.^  If  the  right  to  terminate  the  contract  is  reserved 
to  be  exercised  in  case  of  delay,  and  it  merely  authorizes 
the  public  body  in  the  event  the  contractor  failed  to  com- 
plete any  one  section  of  the  work  to  discontinue  such  work 
and  employ  others  to  do  that  work,  this  clause  does  not 

1  Wakefield  Cons.  Co.  v.  New  York,  supra;  Smith  Cont.  Co.  v.  New  York, 
supra. 

2  Wakefield  Cons.  Co.  v.  New  York,  supra;  Smith  Cont.  Co.  v.  New  York, 
supra. 

'  Wakefield  Cons.  Co.  v.  New  York,  supra;  Smith  Cont.  Co.  v.  New  York, 
supra. 

*  Wakefield  Cons.  Co.  v.  New  York,  supra. 
^  Idem. 

452 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  314 

contemplate  an  entire  abrogation  of  the  contract  as  the 
contractor  is  still  entitled  to  the  contract  price  less  the 
amount  expended  to  complete  a  particular  part  suspended.^ 
When  the  entire  contract  is  improperly  abrogated, 
whether  the  occasion  is  that  no  sufficient  basis  for  its 
termination  exists  or  no  power  exists  to  terminate  it 
entirely,  the  contractor  is  entitled  to  recover  his  damages 
as  for  a  breach  of  the  contract.-  Where  the  sole  material 
express  promise  is  to  complete  work  by  a  certain  date,  if 
then  completed  the  public  body  has  no  concern  with  inter- 
mediate delays.  These  clauses  reserving  the  right  to  annul 
do  not,  however,  import  a  promise  to  exercise  such  diligence 
as  will  satisfy  the  engineer.  It  is  one  thing  to  reserve  the 
right  to  let  further  continuance  of  a  contract  depend  upon 
the  judgment  of  the  engineer;  it  is  quite  another  to  make 
his  dissatisfaction  with  the  progress  to  be  conclusive  of  a 
breach.  When,  therefore,  the  contractor  had  sufficient 
time  left  in  which  to  complete  when  he  was  turned  away 
from  the  work  and  the  contractor  might  have  completed  in 
time,  the  contract  cannot  be  said  to  be  breached  so  as  to 
allow  the  public  body  to  recover  the  difference  in  cost 
of  completion.^  When  the  contract  provides  for  approval 
by  a  higher  officer  of  the  decision  of  annulment  by  a  resi- 
dent engineer,  yet  if  upon  annulment  the  contractor  re- 
fuses to  go  on,  there  is  no  need  of  performing  the  useless 
ceremony  of  obtaining  such  approval  and  the  contractor 
may  not  avail  himself  of  it  when  sued  for  a  breach  of  con- 
tract based  upon  his  refusal.'' 

iCody  V.  New  York,  71  N.  Y.  App.  Div.  54;  Wakefield  Cons.  Co.  v.  New 
York,  supra;  Smith  Cont.  Co.  v.  New  York,  supra. 

2  U.  S.  V.  O'Brien,  220  U.  S.  321,  55  L.  Ed.  481,  aff'g  163  Fed.  1022. 

^  Wakefield  Cons.  Co.  v.  New  York,  supra. 

*  Graham  v.  U.  S.,  231  U.  S.  474,  58  L.  Ed.  319,  aff'g  188  Fed.  651. 

453 


§  315  ]  PERFORMANCE   AND   BREACH  [  PART  V 

§  315.  Abandonment. 

The  obligation  of  performance  on  one  side  of  a  contract 
is  as  strong  as  a  similar  obligation  on  the  other  side.  The 
duty  is  mutual  and  reciprocal.  Whether  the  obligation  is 
to  deliver  goods  within  a  certain  time,  or  perform  work  to 
the  satisfaction  of  the  public  body,  there  is  a  like  duty  to 
receive  the  goods  when  delivered,  or  to  show  why  work, 
which  a  contractor  claims  has  been  completed,  is  not 
satisfactory.^ 

When  goods  imder  a  contract  are  tendered  and  refused 
during  the  life  of  the  contract,  the  contractor  is  not  bound 
to  deliver  after  the  contract  has  expired.  If  he  does,  how- 
ever, it  will  be  at  the  contract  price.  If  he  fails  to  dehver 
or  tender  again  it  cannot  be  said  he  has  abandoned  his 
contract.  2  So  if  he  leaves  his  plant  on  the  work  this  is 
equivalent  to  a  tender  of  readiness  to  perform  any  further 
work  that  might  be  required,  and  it  becomes  the  duty  of 
public  officers  to  point  out  what  omissions  or  defects  exist. 
If  they  fail  to  do  this,  after  a  reasonable  time  he  can  re- 
move his  plant  and  claim  that  the  pubUc  body  is  satisfied 
with  his  performance  and  recover  accordingly.^  The 
agents  of  a  public  body  may  not  lead  him  to  understand 
that  he  has  complied  with  the  terms  of  his  contract  and 
later  claim  a  reduction  when  it  has  become  too  late  for  him 
to  remedy  the  situation.^ 

§  316.  Failure  to  Object  or  Take  Advantage  of  Breach 
During  Performance. 

TVTiere  a  contract  is  breached  during  performance  the 
injured  party  must  take  advantage  of  it.    If  he  fails  to  do 

1  Gibbons  v.  U.  S.,  2  Ct.  CI.  421;  Kimball  v.  U.  S.,  24  Ct.  CI.  35.     See  §  308. 

2  Gibbons  v.  U.  S.,  supra. 

3  Kimball  v.  U.  S.,  supra. 

*  Merrian  v.  U.  S.,  20  Ct.  CI.  290. 

454 


CHAP.  XLVI  ]  PERFORMANCE   AND   BREACH  [  §  318 

this  he  cannot  later  assert  the  breach.^  If  later  the  con- 
tract is  rescinded  or  annulled  he  cannot  set  up  the  breach 
which  he  has  waived.^  If  instead  of  claiming  a  forfeiture 
as  a  result  of  a  breach,  the  public  body  rests  upon  a 
clause  which  enables  it  to  go  on  and  complete  the  work 
and  charge  the  expense  to  the  contractor,  such  action  will 
prevent  it  from  later  insisting  when  the  contractor  sues 
for  a  claimed  balance,  that  the  contract  was  forfeited. 
The  only  remedy  of  the  public  is  to  counterclaim  the  cost 
of  completing  the  work.^ 

§  317.  Conditions  Precedent. 

The  breach  of  a  contract  by  failure  to  fulfill  a  condition 
precedent  will  prevent  any  recovery  by  the  dilatory  party 
either  on  the  contract  or  on  quantum  meruit.  Such  breach 
gives  to  the  injured  party  the  right  to  rescind  the  contract 
or  treat  it  as  broken  and  recover  damages  as  for  a  total 
breach.^ 

But  performance  of  even  conditions  precedent  may  be 
waived.^ 

§  318.  Performance — Covenants  to  Keep  in  Repair. 

An  unconditional  express  covenant  to  keep  in  repair  is 
equivalent  to  a  covenant  to  rebuild  and  it  will  bind  the 
contractor  to  make  good  any  injury  which  human  power 
can  remedy  even  if  caused  by  storm,  flood,  fire,  ine\atable 
accident  or  even  the  act  of  a  stranger.^     A  covenant  to 

1  Farrelly  v.  U.  S.,  159  Fed.  671;  Mills  Co.  v.  State,  110  N.  Y.  Apn.  Div. 
843,  187  N.  Y.  552;  Taylor  v.  New  York,  83  N.  Y.  625;  Kennedy  v.  New  York, 
99  N.  Y.  App.  Div.  588;  York  v.  York  Ry.  Co.,  229  Pa.  St.  336,  78  Atl.  128. 

2  Mills  Co.  V.  State,  supra;  Farrelly  v.  U.  S.,  supra. 
^  Taylor  v.  New  York,  supra. 

^  Bridgeport  v.  ^Btna  Indemnity  Co.,  91  Conn.  197,  99  Atl.  566. 

5  Bradley  v.  McDonald,  218  N.  Y.  351,  113  N.  E.  340;  Mayor  v.  Butler,  1 
Barb.  325. 

«  Meriwether  v.  Lowndes  County,  89  Ala.  362,  7  So.  198;  Riley  v.  Brooklyn, 
46  N.  Y.  444;  Mitchell  v.  Hancock  County,  91  Miss.  414,  45  So.  571. 

455 


§  318  ]  PERFORMANCE   AND    BREACH  [  PART  V 

surrender  leased  premises  at  the  expiration  of  the  lease  in 
the  same  condition  as  at  its  execution,  allowing  for  reason- 
able use  and  wear  and  excepting  damage  by  the  elements, 
will  not  bind  to  restore  the  premises  to  their  former  condi- 
tion. Whether  damages  flow  from  a  reasonable  use,  keep- 
ing in  mind  the  purposes  of  the  lease,  is  a  question  for  the 
jury.^  Where  there  is  a  technical  or  implied  surrender  of 
the  premises  upon  each  renewal  of  the  lease,  such  surrender 
will  not  be  made  to  work  injustice  to  the  parties  in  hostil- 
ity to  their  real  intention.  A  surrender  of  the  lease  during 
its  term  and  an  acceptance  by  the  public  body  will  not 
extinguish  rights  of  action  already  accrued,  whether  for 
damages  or  rent  in  arrears.-  Of  course  acceptance  of 
possession  with  full  knowledge  of  the  facts  or  full  oppor- 
timity  to  know  and  without  protest  or  claim  of  damage  for 
breach  or  violation  of  covenants  may  constitute  an  admis- 
sion of  performance  of  the  covenant  and  a  waiver  of  any 
right  of  action.^ 

§  319.  Covenant  to  Renew  Lease. 

Covenants  by  a  landlord  for  continual  renewals  of  lease 
are  not  favored  since  they  tend  to  create  a  perpetuity. 
They  are  nevertheless  valid,  if  explicit.  ^  When,  therefore, 
a  public  body  in  executing  a  lease  manifests  an  intention 
to  bind  itself  to  grant  future  renewals,  and  this  intention  is 
not  left  to  conjecture  or  implication,  but  is  clearly  and 
specifically  provided  by  the  terms  of  the  lease,  a  covenant 
for  future  renewals  will  be  enforced.^ 

A  general  covenant  in  a  lease  to  renew  upon  the  same 

1  McGregor  v.  Bd.  of  Education,  107  N.  Y.  511,  14  N.  E.  420. 

2  Idem. 
'  Idem. 

*  Bums  V.  New  York,  213  N.  Y.  516,  108  N.  E.  77;  Drake  v.  Board  of  Edu- 
cation, 208  Mo.  540,  106  S.  W.  650. 
^  Burns  v.  New  York,  supra. 

456 


CHAP.  XLVI  ]  PERFORMANCE   AND    BREACH  [  §  320 

terms,  conditions  and  agreements  as  contained  in  the  origi- 
nal lease  is  not  sufficient  to  show  an  intention  to  grant 
renewals  in  perpetuity.  The  covenant  for  renewal  must 
contain  language  which  shows  an  intention  to  include  in 
renewal  leases  a  particular  covenant  in  regard  to  future 
renewals.^  Such  a  covenant  will  bind  the  public  body 
until  the  lands  are  required  for  public  purposes. ^  The  right 
to  such  renewals  may  be  lost  and  the  covenant  for  re- 
newals waived  by  acts  of  the  parties  which  amount  to  a 
practical  construction  of  the  covenant.^ 

§320.  Money  Due— Set-off. 

Where  a  contractor  is  owed  money  by  a  pubhc  body  for 
performance  of  one  contract  and  he  becomes  liable  to  the 
public  body  in  damages  for  breach  of  another  contract  the 
pubhc  body  have  the  right  to  retain  the  money  due  under 
one  contract  and  charge  it  as  a  set-off  against  such  liability. 
While  it  might  assert  such  liability  in  an  action  it  is  not 
essential.  It  may  refuse  to  pay  under  one  contract  what  it 
must  eventually  recover  as  damages  for  a  breach  of  the 
other.^ 

^  Bums  V.  New  York,  supra. 

2  Burns  v.  New  York,  supra;  Storms  v.  Manhattan  Ry.  Co.,  178  N.  Y.  493, 
71  N.  E.  3. 

3  Syms  V.  Mayor,  etc.,  of  New  York,  105  N.  Y.  153,  11  N.  E.  369. 

4  Barry  v.  V.  S.,  229  U.  S.  47;  Wilds  v.  Bd.  of  Education,  227  N.  Y.  211,  125 
N.  E.  89;  Modern  Steel  Structural  Co.  v.  Van  Buren,  126  Iowa,  606, 102 N.  W. 
536. 


457 


CHAPTER  XLVII 

PERFORMANCE — NON-PERFORMANCE — COMPLETION  BY 
PUBLIC  BODY 

§  321.  Completion  by  Public  Body. 

Where  a  contractor  with  a  pubhc  body  fails  to  complete 
an  midertaking  assumed  by  him,  the  right  of  the  public 
body  to  complete  the  undertaking  whether  it  be  a  building 
or  other  structure  or  work  cannot  be  made  to  depend  upon 
a  provision  of  the  contract  authorizing  completion,  but 
rests  upon  the  elemental  ground  that  a  party  to  a  contract 
not  broken  through  his  fault  is  entitled  to  its  benefits. 
And  if  an  expenditure  of  money  is  necessary  to  protect  and 
complete  that  which  is  already  in  the  possession  of  the 
public  body  as  a  result  of  part  performance,  such  expendi- 
ture may  be  made  and  recovery  had  for  it.^  The  public 
body  is  entitled  to  the  benefit  of  its  bargain  and  to  have 
the  work  or  structure  completed  at  no  greater  cost  to  it 
than  the  contract  price.  ^  But  in  endeavoring  to  fulfill  the 
contract,  the  public  body  may  not  proceed  in  a  reckless  or 
extravagant  manner  and  charge  the  contractor  for  expenses 
unreasonably  or  unnecessarily  incurred.^  It  is,  however, 
entitled  to  the  reasonable  cost  of  the  work  necessarily 
done.''   But   this   includes   the  doing   over   again   of  work 

1  Ludowici  Caladon  Co.  v.  Indep.  Sch.  Dist.,  149  N.  W.  (Iowa)  845. 

2  Ludowici  Caladon  Co.  v.  Indep.  Sch.  Dist.,  supra;  .(Etna  Iron  Wks.  v. 
Kossuth  County,  79  Iowa,  40,  44  N.  W.  215. 

»  Mayor  &c.  of  New  York  v.  Second  Ave.  R.  R.  Co.,  102  N.  Y.  572,  7  N.  E. 
905;  Camden  v.  Ward,  67  N.  J.  L.  558,  52  Atl.  392. 

*  Mayor  &c.  N.  Y.  v.  Second  Ave.  R.  R.  Co.,  supra;  Powers  v.  Yonkers,  114 
N.  Y.  145,  21  N.  E.  132. 

458 


C  HAP.  XLVII  ]      COMPLETION   BY   PUBLIC   BODY  [  §  322 

already  done  where  necessary.^  It  is  the  duty  of  the 
pubhc  body  to  take  all  proper  measures  to  diminish 
and  reduce  the  quantum  of  damages. ^  It  may  deduct  the 
cost  of  completion  from  any  unpaid  balance  of  the  contract 
price. ^  But  the  work  of  completion  with  which  the  con- 
tractor is  to  be  charged  must  be  the  same  work  which  he 
had  agreed  to  perform.''  Where  the  public  body  volunta- 
rily undertakes  to  raise  a  caisson,  the  property  of  the  con- 
tractor, thereby  saving  to  him  the  benefits  of  his  contract, 
it  can  only  charge  against  him  what  it  would  reasonably 
have  cost  to  do  such  work.^  But  while  a  pubhc  body  may 
complete  unfinished  work  at  the  expense  of  the  contractor, 
it  is  not  restricted  to  that  remedy  but  may  recover  from 
the  contractor  or  his  surety  the  damages  incurred.^ 

§  322.  The  Same — Property  in  Materials. 

When  a  contractor  is  to  furnish  materials  and  labor  for 
the  purpose  of  erecting  a  structure  or  work  on  premises  of 
another,  the  materials  are  the  property  of  the  contractor 
until  affixed  to  the  land  or  are  delivered  to  and  accepted  by 
him,  and  this  rule  is  not  altered  by  the  fact  that  the 
materials  were  purchased  with  the  intention  of  putting 
them  into  the  structure  or  work  or  that  they  were  brought 
upon  the  land  of  the  public  body,  or  that  certain  prelimi- 
nary work  had  been  done  upon  them  in  order  to  adapt 
them  for  annexation  to  the  structure,  or  that  they  have 
been  tentatively  affixed  to  the  structure  or  work  for  the 

1  Powers  V.  Yonkers,  supra. 

2  Rowe  V.  Peabody,  207  Mass.  226,  93  N.  E.  604. 

^  Powers  V.  Yonkers,  supra;  Jones  v.  New  York,  32  Misc.  211,  60  App.  Div. 
161,  174  N.  Y.  517,  66  N.  E.  1113;  Wells  v.  Bd.  of  Educ.  West  Bay  City,  78 
Mich.  260,  44  N.  W.  267;  McGowan  v.  U.  S.,  35  Ct.  CI.  606. 

*  U.  S.  V.  Axman,  234  U.  S.  36,  58  L.  Ed.  1198,  aff'g  193  Fed.  644. 

6  Snare  &  Triest  Co.  v.  U.  S.,  50  Ct.  CI.  370. 

6  U.  S.  V.  U.  S.  Fidelity  &  G.  Co.,  236  U.  S.  512,  59  L.  Ed.  696. 

459 


§  322  ]  PERFORMANCE  AND  BREACH        [  PART  V 

purpose  of  seeing  whether  they  would  fit  and  afterwards 
removed  or  that  the  pubHc  body  has  made  payments  to 
the  contractor  as  the  work  progressed.^  Under  this  rule  if 
a  contractor  abandons  his  work  and  leaves  materials  and 
appliances  at  the  site  and  they  are  used  by  the  pubUc 
body  in  completing  the  work,  the  contractor  may  recover 
their  value  or  the  value  of  their  use.-  And  under  the  same 
principle  the  contractor  cannot  compel  the  public  body  to 
use  material  left  behind  which  the  public  body  does  not 
desire  to  use  or  accept.^  This  is  especially  true  where 
the  contract  creates  liabihty  only  for  material  in  place. 
When  accordingly  a  surety  of  the  contractor  completes  the 
work  which  had  been  stopped  and  possession  taken  by 
the  public  body  and  such  surety  uses  material  which  had 
previously  been  rejected  by  the  public  body  and  sold  under 
execution  by  the  sheriff  but  which  was  still  allowed  to  re- 
main on  the  site  by  a  purchaser  and  was  there  when  the 
surety  undertook  the  work,  the  public  body  had  no  interest 
in  such  material  since  it  did  not  pass  the  inspection  required 
by  the  contract,  and  the  surety  of  the  contractor  acquired 
no  rights  in  it  and  was  liable  for  appropriating  it.^ 

When  a  construction  contract  has  been  annulled  and  relet 
to  a  new  contractor  and  the  government  retained  certain 
property  and  material  at  the  site,  without  the  consent  of 
its  true  owner,  and  turned  it  over  to  the  new  contractor, 
whom  it  advised  that  it  would  not  be  liable  under  any  cir- 
cumstances for  the  seizure  of  the  property,  no  liability  on 
the  part  of  the  government  can  arise.     Where  the  govem- 

1  Rochelle  v.  Evens  &  H.  F.  B.  Co.,  164  111.  App.  412.  See  MuscreUi  v. 
Mercantile  Trust  Co.,  219  Pa.  St.  602,  69  Atl.  40. 

^Bayley  v.  Anderson,  71  Wis.  417,  36  N.  W.  863;  Elliott  v.  Wilkinson,  8 
Yerg.  (Tenn.)  411. 

» Dyer  v.  Middle  Kittitas  Irrig.  Dist.,  40  Wash.  238,  82  Pac.  301. 

*  MuscreUi  v.  Mercantile  Trust  Co.,  supra. 

460 


CHAP.  XLVII  ]      COMPLETION   BY   PUBLIC   BODY  [  §  322 

ment  did  not  undertake  to  transfer  title  or  guarantee 
possession,  the  implication  of  a  contract  that  the  govern- 
ment would  pay  is  clearly  rebutted  and  no  implied  con- 
tract can  arise.  The  new  contractor  alone  can  be  held 
liable  for  the  conversion  of  the  property.^  Where  ap- 
phances  of  a  defaulting  contractor  are  taken  over  by  the 
government  with  knowledge  of  a  chattel  mortgage  against 
some  of  them  and  the  mortgagee  entitled  to  possession 
demands  these  and  the  government  refuses  and  retains 
them  for  use,  and  the  mortgagee  consents  to  the  use  upon 
an  expectation  and  promise  of  payment,  an  implied  con- 
tract to  pay  therefor  will  arise  against  the  government.^ 
But  where  a  contract  for  the  erection  of  a  public  building 
provided  that  in  case  of  abandonment  the  public  body 
might  complete  the  structure,  using  for  the  purpose  such 
material  as  was  found  upon  the  line  of  work,  and  when  the 
contractor  abandoned  it  the  public  body  took  possession 
and  completed  the  building,  the  possession  of  the  materials 
before  the  subsequent  bankruptcy  of  the  contractor  gave 
the  public  body  complete  title  against  his  trustee  and  such 
materials  could  be  applied  in  reduction  of  the  contractor's 
liability  to  the  public  body  under  the  contract,  not  by 
virtue  of  any  lien,  but  in  the  nature  of  a  payment.^  Such 
a  clause  in  a  contract  cannot  create  a  lien  upon  future 
acquired  property,  and  where  a  trustee  in  bankruptcy  is 
appointed  before  possession  is  taken  under  it  and  the  rights 
of  creditors  intervene,  the  public  body  can  acquire  no 
title.''  These  clauses  which  provide  that,  in  case  of  default 
in  a  public  building  contract  by  the  contractor,  the  public 
body  may  complete  and  use  materials  brought  by  the  con- 

1  BaU  Engineering  Co.  v.  White,  250  U.  S.  46,  63  L.  Ed.  835. 

2  U.  S.  V.  Buffalo  Pitts  Co.,  193  Fed.  905,  aff'd  234  U.  S.  228,  58  L.  Ed.  1290. 

3  Wilds  V.  Bd.  of  Education,  227  N.  Y.  211,  125  N.  E.  89. 

*  Titusville  Iron  Co.  v.  New  York,  207  N.  Y.  203,  100  N.  E.  806. 

461 


§  322  ]  PERFORMANCE   AND   BREACH  [  PART  V 

tractor  on  the  ground,  being  accountable  to  him  for  any 
excess  of  unpaid  contract  price  over  the  cost  of  completion, 
are  not  for  a  forfeiture,  which  must  therefore  be  construed 
strictly  against  the  public  body,  since  they  do  not  involve 
the  taking  of  any  property  of  the  contractor  by  way  of 
penalty  or  punishment.  They  are  in  the  interest  of  both 
parties  and  are  to  receive  a  construction  which  will  accom- 
plish that  purpose.^  Where  the  materials  left  behind  by 
the  contractor  are  less  in  value  than  the  cost  of  completing 
the  abandoned  work  beyond  the  contract  amount,  the  con- 
tractor may  not  recover  for  such  materials.^ 

§  323.  Property  in  Excavated  Materials  at  Site — Chattels 
at  Site. 
If  a  contract  to  grade  and  improve  a  street  provides 
that  the  contractor  shall  remove  surplus  earth  and  contains 
no  reservation  of  title  in  the  public  body,  or  stipulation  or 
direction  as  to  what  should  be  done  with  it,  except  to 
remove  it  from  the  line  of  work,  this  implies  that  a  con- 
tractor may  do  what  he  wishes  with  it.  The  provision 
operates  as  an  abandonment  or  transfer  by  the  public 
body  of  all  rights  thereto  and  it  becomes  part  of  the  con- 
tractor's compensation  for  doing  the  work,  and  his  prop- 
erty, as  soon,  at  least,  as  it  is  loaded  upon  vehicles  for  the 
purpose  of  removal.  Where  the  public  body  changes  the 
plan  so  that  performance  becomes  impossible,  the  contrac- 
tor is  entitled  to  recover  the  difference  between  the  cost  of 
performance  and  the  contract  price,  including  as  part 
thereof  the  market  value  of  the  surplus  top  soil  after  de- 
ducting  the   reasonable   expense   of   marketing   it.^     The 

1  Wilds  V.  Bd.  of  Educ,  supra,  and  cases  cited. 

2  Sch.  Town  of  Winamac  v.  Hess,  151  Ind.  229,  50  N.  E.  81. 

3  Long  Island  Cont.  &  S.  Co.  v.  New  York,  204  N.  Y.  73,  97  N.  E.  483.    See 
Welch  V.  McNeil,  214  Mass.  402,  101  N.  E.  985. 

462 


CHAP.  XLVII  ]      COMPLETION   BY    PUBLIC   BODY  [  §  323 

clause  requiring  consent  of  the  engineer  to  remove  earth  is 
not  applicable  to  such  as  under  the  terms  of  the  contract 
is  made  the  property  of  the  contractor.^  When,  in  con- 
structing a  Barge  Canal,  the  State  requires  buildings  to  be 
removed  from  the  site  and  these  buildings  are  made  the  prop- 
erty of  the  contractor  to  dispose  of  as  he  sees  fit,  the  contractor 
may  sell  the  buildings  and  the  purchaser  has  a  right  to  enter 
upon  the  premises  to  remove  them.^  Where  buildings  alone 
are  thus  conveyed,  they  stand  in  contemplation  of  law,  severed 
from  the  soil  and  will  vest  as  chattels  in  the  grantee  even 
before  actual  severance.^ 

1  Long  Island  Cont.  &  S.  Co.  v.  New  York,  204  N.  Y.  73,  97  N.  E.  483;  Hood 
V.  Whitewell,  66  Misc.  49,  140  App.  N.  Y.  Div.  882. 

2  Hood  V.  Whitewell,  supra. 

3  Idem;  Schucbardt  v.  New  York,  53  N.  Y.  202. 


463 


CHAPTER  XLVIII 

BOND  OF  CONTRACTOR 

I  324.  Statutory  Bond — Power  of  Legislature  to  Require. 

The  legislatures  of  the  States  under  their  general  power 
to  change  or  repeal  the  common  law  may  create  new  rights 
and  impose  new  obligations  unknown  at  common  law,  and 
when  in  the  exercise  of  their  sovereign  power  they  enact 
that  municipalities  or  the  agents  of  the  State  or  of  the 
Nation  shall  require  a  bond  of  all  public  contractors  for  the 
faithful  performance  of  public  work  and  for  the  payment 
of  all  wages  or  moneys  due  to  laborers  and  material  men  or 
subcontractors,  these  enactments  are  a  valid  exercise  of 
legislative  power.  ^ 

§  325.  Public  Body  has  Implied  Right  to  Require  Bond  for 
Faithful  Performance  and  to  Pay  Laborers  and 
Material  Men. 
Even  where  express  authority  has   not  been  conferred 
upon  public  bodies  to  require  the  contractor  to  give  a  bond 
to  pay  laborers  and  material  men,  these  public  bodies  have 
implied  power  to  insert  in  the  contract  or  in  the  usual  con- 
tractor's   bond    for    faithful    performance,    the    additional 
obligation  that  the  contractor  shall  pay  all  laborers  and 
material  men  who  have  claims,  and  that  to  the  accomplish- 
ment of  this  object  the  public  body  may  retain  sufficient 
money  due  the  contractor  with  which  to  pay  such  claims.^ 

1  Wilson  V.  Whitmore,  92  Hun,  466,  157  N.  Y.  693,  51  N.  E.  1094;  St.  Paxil 
t'.  Butler,  30  Minn.  459  16  N.  W.  362;  Carpenter  v.  Furrey,  128  Cal.  665, 
61  Pac.  369;  Grant  v.  Berrisford,  94  Minn.  45,  101  N.  W.  940. 

2  McDonald  v.  New  York,  29  Misc.  504;  Baker  v.  Bryan,  64  Iowa,  561,  21 

464 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  325 

This  power  is  sustained  as  an  exercise  of  that  right  which 
all  pubUc  bodies  possess  to  insert  such  reasonable  provi- 
sions in  their  contracts  as  they  may  deem  advisable;  and 
in  this  instance  such  a  provision  enures  to  the  benefit  of  a 
public  body  since  if  laborers  and  material  men  are  secure,  a 
better  quality  of  labor  and  of  material  will  be  attracted  to 
the  work  because  of  the  assurance  thus  afforded.  Further- 
more, it  gives  credit  to  the  contractor  and  enables  him  to 
procure  labor  and  purchase  material  more  readily  and  on 
better  terms  than  otherwise.  Greater  competition  in  bid- 
ding results,  so  that  it  is  not  only  to  the  interest  of  the 
public  body,  but  its  plain  business  duty  to  secure  these 
advantages  by  the  insertion  of  such  a  provision  in  the 
bond.^  The  consideration  which  supports  the  contract 
supports  the  bond  which  is  required  as  a  condition  or  term 
in  awarding  the  contract.^  Public  bodies  have  the  unplied 
power  also  without  statutory  grant  to  require  a  bond  to 
secure  subcontractors  as  well  as  laborers  and  material  men.^ 

N.  W.  83;  Denver  v.  Hindry,  40  Colo.  42,  90  Pac.  1028;  People's  Lumber  Co. 
V.  Gillard,  136  Cal.  55,  68  Pac.  576;  Amer.  Surety  Co.  v.  Lauber,  22  Ind.  App, 
326,  53  N.  E.  793;  King  v.  Downey,  24  Ind.  App.  262,  56  N.  E.  680;  Knapp  v. 
Swaney,  56  Mich.  345, 23  N.  W.  162;  Detroit  Bd.  of  Educ.  v.  Grant,  107  Mich. 
151,  64  N.  W.  1050;  Devers  v.  Howard,  144  Mo.  671,  46  S.  W.  625;  State  ex 
rel.  V.  Webster,  20  Mont.  219,  50  Pac.  558;  Kansas  City  Sch.  Dist.  v.  Livers, 
147  Mo.  580,  49  S.  W.  507;  Dolly  v.  Crume,  41  Neb.  655,  59  N.  W.  806;  Smith 
V.  Bowman,  32  Utah,  33,  88  Pac.  687;  Puget  Sound  State  Bk.  v.  Gallucci,  82 
Wash.  445,  144  Pac.  698;  Amer.  Rad.  Co.  v.  Amer.  Bond  Co.,  72  Neb.  100, 
100  N.  W.  138;  State  v.  Liebes,  19  Wash.  589,  54  Pac.  26;  Phila.  v.  Stewart, 
195  Pa.  309,  45  Atl.  1056;  Phila.  v.  McLinden,  206  Pa.  172,  54  Atl.  719; 
Contra,  Lyth  v.  Kingston,  14  N.  Y.  App.  Div.  11;  Park  v.  Sykes,  67  Minn. 
153, 69  N.  W.  712;Gastonia  v.  McEntee  &  Co.,  131  N.  C.  363,  42  S.  E.  858; 
Union  Sheet  Metal  Wks.  v.  Dodge,  129  Cal.  390,  62  Pac.  41;  U.  S.  Gypsum 
Co.  V.  Gleason,  135  Wis.  539,  116  N.  W.  238;  R.  Connor  Co.  v.  ^Etna  Indem. 
Co.,  136  Wis.  13,  115  N.  W.  811;  Hamilton  v.  Gambell,  31  Oreg.,  328,  48  Pac. 
433. 

1  St.  Louis  V.  Von  Phul,  133  Mo.  561,  34  S.  W.  843. 

2  Young  V.  Young,  21  Ind.  App.  509,  52  N.  E.  776;  Williams  v.  Markland, 
15  Ind.  App.  669,  44  N.  E.  562;  Kauffmann  v.  Cooper,  46  Neb.  644,  65  N.  W. 
796;  Gastonia  v.  McEntee  &  Co.,  supra. 

3  National  Surety  Co.  v.  Hall-Miller  Dec.  Co.,  104  Miss.  626,  61  So.  700. 

465 


§  326  ]  PERFORMANCE  AND   BREACH  [  PART  V 

§  326.  Construction. 

There  should  be  no  favoritism  or  tenderness  shown  to  a 
company  organized  to  act  as  surety  for  hire.^  While  it  is  a 
well-settled  rule  that  a  surety  is  entitled  to  a  somewhat 
rigid  construction  of  his  contract,  before  applying  such 
rule  his  contract  is  subject  to  the  same  construction  as 
any  other  contract,  in  order  to  ascertain  and  give  effect 
to  the  intent  of  the  parties.  It  is  not  until  this  is  ascer- 
tained that  its  language  is  to  be  regarded  as  strictissimi 
juris.-  The  liability  of  a  surety  is,  however,  not  to  be  ex- 
tended by  implication  beyond  the  terms  of  his  contract. 
To  the  extent,  and  in  the  manner  and  under  the  circum- 
stances pointed  out  in  his  obligation  he  is  bound,  and  no 
further.  He  has  the  right  to  stand  on  its  terms.^  For  the 
purpose  of  determining  the  intention  of  the  parties  the  bond 
and  the  contract  will  be  read  together,  where  the  bond 
refers  to  and  embodies  the  contract  within  it.''  But  some 
authorities  deny  the  application  of  the  rule  strictissimi  juris 
to  surety  companies  organized  for  the  purpose  of  conducting 
an  indenmity  business  at  established  rates  of  compensation.^ 

§  327.  Validity  of  Bond  of  Contractor  where  Contract  is 
Void — Where  Statute  not  Followed. 

Even  though  the  contract  pursuant  to  which  a  bond  to 

1  Richardson  v.  Steuben  County,  226  N.  Y.  13,  122  N.  E.  449;  Vil.  of 
Argyle  v.  Plunkett,  226  N.  Y.  306,  124  N.  E.  1;  Getchell  v.  Peterson,  124 
Iowa,  599,  615,  100  N.  W.  550;  U.  S.  F.  &  G.  Co.  v.  U.  S.^  191  U.  S.  416,  48 
L.  Ed.  242. 

2  Wilson  V.  Whitmore,  92  Hun,  466,  157  N.  Y.  693,  51  N.  E.  1094;  U.  S.  use 
of  Hill  V.  Amer.  Surety  Co.,  200  U.  S.  197,  50  L.  Ed.  437. 

3  Glenn  County  v.  Jones,  146  Cal.  518,  80  Pac.  695;  Greenfield  &  Co.  v. 
Parker,  159  Ind.  571,  65  N.  E.  747;  Sterling  i;.  Wolf,  163  111.  467,  45  N.  E.  218. 

*  Searlea  v.  Flora,  225  111.  167,  80  N.  E.  98;  U.  S.  use  of  Hill  v.  Amer.  Surety 
Co.,  200  U.  S.  197,  50  L.  Ed.  437;  Williams  v.  Markland,  15  Ind.  App.  669,  44 
N.  E.  .562. 

5  U.  S.  F.  &  G.  Co.  V.  U.  S.,  191  U.  S.  416,  48  L.  Ed.  242;  U.  S.  use  of  Dist. 
of  Col.  V.  Bayly,  39  App.  D.  C.  105. 

466 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  327 

pay  laborers  and  material  men  is  given  turns  out  to  be  void, 
this  fact  cannot  be  set  up  by  the  sureties  to  defeat  the 
claims  of  laborers  and  material  men,  since  a  guaranty  of 
payment  of  an  obligation  or  the  performance  of  an  under- 
taking imports  an  agreement  that  the  instrument  is  valid 
and  the  undertaking  legal.  ^  The  sureties  are  bound  by  the 
recitals  in  the  bond  of  due  execution  of  the  contract. ^ 
Again,  the  contract  between  the  material  man  or  laborer  and 
the  contractor  is  independent  of  the  public  contract,  and  so 
the  invalidity  of  the  latter  can  have  no  effect  upon  the 
contract  between  laborers  or  material  men  and  the  public 
body.^  If  the  contract  becomes  void  for  omission  to  record 
it  as  required  by  law,  this  will  not  prevent  a  recovery  upon 
the  bond  given  to  accompany  the  contract.^  Unless  a  stat- 
ute makes  a  bond  which  fails  to  follow  it  void,  if  a  bond 
is  taken  under  the  statute  with  a  condition  in  part  pres- 
cribed by  statute  and  in  part  not  provided,  a  recovery  may 
be  had  upon  the  bond  for  a  breach  of  the  part  provided  by 
statute  so  long  as  it  is  clearly  separable  from  the  other  part. 
The  super-additions  will  be  regarded  as  surplusage.^  A 
bond  voluntarily  given  may  be  enforced  according  to  its 
term  even  though  it  exceeds  the  requirements  of  an  ordi- 
nance  providing   for   it.^     Of   course   those   who   furnish 

1  Kansas  City  Hyd.  P.  B.  Co.  v.  Nat.  Surety  Co.,  140  Fed.  507;  Bell  v. 
Kirkland,  102  Minn.  213,  113  N.  W.  271;  Philadelphia  v.  McLinden,  205  Pa. 
172,  54  Atl.  719;  Kansas  City  ex  ret.  Diamond  B.  &  T.  Co.  v.  Schroeder,  196 
Mo.  281,  93  S.  W.  405;  Contra,  Portland  v.  Bitum.  Pav.  Co.,  33  Oreg.  307, 
52  Pac.  28. 

2  Bell  V.  Kirkland,  supra. 

3  Kansas  City  ex  rel.  Diamond  B.  &  T.  Co.  v.  Schroeder,  196  Mo.  281,  93 
S.  W.  405;  Kansas  City  H.  P.  Co.  v.  National  Surety  Co.,  157  Fed.  620; 
National  Surety  Co.  v.  Kansas  City  Hyd.  B.  Co.,  73  Kan,  196,  84  Pac.  1034; 
National  Surety  Co.  t;.  Wyandotte  C.  &  T.  Co.,  76  Kan.  914,  92  Pac.  1111. 

*  Kiessig  v.  Allspaugh,  91  Cal.  231,  27  Pac.  655,  13  L.  R.  A.  418,  99  Cal. 
452,  34  Pac.  106;  Summertown  v.  Hanson,  117  Cal.  252,  49  Pac.  135. 
5  Detroit  Bd.  of  Educ.  v.  Grant,  107  Mich.  151,  64  N.  W.  1050. 
« Philadelphia  v.  Nichols  Co.,  214  Pa.  St.  265,  63  Atl.  886. 

467 


§  327  ]  PERFORMANCE  AND  BREACH        [  PART  7 

materials  with  knowledge  of  or  participation  in  the  illegal- 
ity of  a  contract  cannot  recover  on  the  bond  which  ac- 
companies the  contract.^ 

§  328.  Effect  of  Naming  Different  Obligee  than  Statute 
Provides. 
Where  these  various  material  men's  statutes  require  a 
bond  to  be  given  to  the  State,  the  Nation  or  some  subdivi- 
sion or  branch  of  either  and  the  bond  fails  to  indicate  the 
obligee  named  in  the  statute,  this  will  not  defeat  a  recovery. 
The  bond  will  become  thereby  invalid  as  a  statutory  bond, 
but  will  be  considered  good  as  a  common-law  bond.^  In 
such  cases  the  obHgor  by  his  consent  to  make  a  board  of 
education,  for  example,  the  trustee  for  the  interested 
parties  instead  of  the  State  as  required  by  statute  makes 
the  bond  a  good  common-law  obhgation  and  himself  liable 
thereon.^ 

§  329.  Statutory  Provision  Requiring — Waiver  of  Bond  of 
Contractor. 
Where  a  statute  requires  that  a  bond  shall  be  given  in 
all  cases  where  municipalities  make  improvement  contracts, 
which  bond  shall  be  conditioned  for  the  faithful  perform- 
ance of  the  work  in  accordance  with  the  plans  and  specifi- 
cations and  the  terms  of  the  contract,  and  the  intent  of  the 
statute  is  to  make  this  requirement  for  the  protection  of 
the  State  which  pays  the  larger  part  of  the  cost  of  the 
improvements,  the  requirement  must  be  strictly  followed, 
since  the  municipal  officers  have  no  power  to  expend  the 
money  of  the  State  for  other  purposes  than  that  for  which 

1  National  Surety  Co.  v.  Wyandotte  Coal  Co.,  76  Kan.  914,  92  Pac.  1111; 
National  Surety  Co.  v.  Kansas  City  H.  P.  B.  Co.,  73  Kan.  196,  84  Pac.  1034. 

» Detroit  Board  of  Education  v.  Grant,  107  Mich.  151,  64  N.  W.  1050; 
Stephen.son  v.  Monmouth  Min.  &  Mfg.  Co.,  84  Fed.  114;  Huggms  v.  Suther- 
land, 39  Wash.  552,  82  Pac.  112. 

*  Detroit  Bd.  of  Education  v.  Grant,  supra. 

468 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  331 

it  was  appropriated  and  possess  no  power  to  waive  any  of 
the  requirements  of  the  statute  designed  to  safeguard  the 
interests  of  the  State  and  the  taxpayers.^ 

§  330.  Public  Officials  have  Discretion  as  to  Sufficiency  of 
Bond  of  Contractor. 

Statutes  requiring  the  giving  of  a  contractor's  bond 
usually  provide  that  the  contractor  shall  execute  a  bond 
with  sufficient  sureties  or  contain  similar  language.  Such 
language  confers  a  discretion  upon  the  public  officials  to 
pass  upon  the  adequacy  of  the  bond  and  the  qualification 
of  the  sureties,  and  when  such  discretion  is  conferred  it  will 
not  be  controlled  or  interfered  with  by  the  courts,  unless 
there  is  an  abuse  of  discretion  or  corrupt  conduct. ^ 

§  331.  Kind  of  Labor  or  Material  Included  in  State  Stat- 
utes. 

The  general  rule  is  that  the  bond  is  only  liable  for  labor 
and  materials  furnished  or  supplied  which  have  gone  into 
and  become  a  part  of  the  work.^  Accordingly  it  is  gener- 
ally ruled  under  bonds  given  on  State  and  city  work  that 
no  recovery  can  be  had  for  machinery  used  or  repaired  in 
the  prosecution  of  the  work.  A  contractor  is  presumed  to 
be  prepared  with  machinery,  tools  and  appliances  neces- 
sary to  carry  out  his  contract.  These  are  furnished  upon 
his  own  credit  presumably  and  not  upon  the  implied  credit 
of  the  public.  They  survive  the  performance  of  the  work, 
do  not  become  a  part  of  it  and  may  be  used  upon  other 

1  Kelly  V.  Torrington,  81  Conn.  615,  71  Atl.  939. 

2  Boseker  v.  Wabash  County,  88  Ind.  267;  Vincent  v.  Ellis,  116  Iowa,  609, 
88  N.  W.  836;  State  ex  rel.  Woodruff  &  Co.  v.  Bartley,  50  Neb.  874,  70  N.  W. 
367;  People  ex  rel.  J.  B.  Lyon  Co.  v.  McDonough,  76  N.  Y.  App.  Div.  257, 
173  N.  Y.  181,  65  N.  E.  963;  People  ex  rel.  McKone  v.  Green,  52  How.  Pr. 
304;  People  ex  rel.  Belden  v.  Contracting  Bd.,  27  N.  Y.  378. 

3  Beals  V.  Fidelity  &  D.  Co.,  76  N.  Y.  App.  Div.  526,  178  N.  Y.  581,  70 
N.  E.  1095. 

469 


§  331  ]  PERFORMANCE   AND    BREACH  [  PART  V 

work.^  But  materials  furnished  under  a  public  contract, 
suitable  for  the  work  to  be  performed,  and  delivered  at  the 
site  will  justify  recovery  upon  the  bond  without  a  showing 
that  they  actually  were  used  in  the  construction.^  The 
scope  and  purpose  of  the  contract  and  bond  will  largely 
control  the  character  of  labor  and  material  to  which 
the  bond  will  be  extended.  It  will  include  the  labor  at  a 
quarry  where  the  contractor  agreed  to  get  out  and  furnish 
stone,  even  though  the  laborers  did  not  know  the  structural 
destination  of  such  stone.^  Thus  labor  in  the  operation  of 
a  pile  driver  was  brought  within  the  bond.^  A  watchman 
employed  to  guard  material  at  the  site  of  work  can  sue 
upon  the  bond  for  wages  due.^  And  the  wages  due  to  a 
blacksmith  engaged  in  sharpening  tools  are  likewise  in- 
cluded.^ Lumber  used  in  false  work  erected  in  the  course 
of  construction  of  a  permanent  bridge  is  included  within 
the  bond.^  Where  the  bond  covers  any  claim  for  which  if 
established  the  public  body  might  become  liable,  it  is 
broad  enough  to  cover  materials  used  in  erecting  a  tem- 
porary fence  needed  in  a  public  improvement.^  Explo- 
sives used   to   blast   rock  in   the   course   of   construction 

1  Kansas  City  use  of  Kansas  City  H.  P.  B.  Co.  v.  Youmans,  213  Mo.  151, 
112  S.  W.  225;  Alpena  ex  rel.  Besser  v.  Title  G.  &  S.  Co.,  159  Mich.  329,  123 
N.  W.  1126;  Alpena  ex  rel.  O'Brien  v.  Same,  159  Mich.  334,  123  N.  W.  1127; 
Empire  State  Surety  Co.  v.  Des  Moines,  152  Iowa,  552,  131  N.  W.  870;  152 
Iowa,  531,  132  N.  W.  837,  Fid.  &  D.  Co.  v.  Hegewald  Co.,  144  Ky.  790,  139 
S.  W.  975;  Standard  Boiler  Wks.  v.  Nat.  Surety  Co.,  71  Wash.  28,  127  Pac. 
573. 

2  Red  Wing  Sewer  P.  Co.  v.  Donnelly,  102  Minn.  192,  113  N.  W.  1;  Bell  v. 
Kirkland,  102  Minn.  213,  113  N.  W.  271. 

3  Combs  V.  Jackson,  69  Minn.  336,  72  N.  W.  565;  Duby  v.  Jackson,  69  Minn. 
342,  72  N.  W.  568. 

*  Geo.  H.  Sampson  Co.  v.  Comm.,  202  Mass.  326,  88  N.  E.  911. 
s  Friedman  v.  Hampden  County,  204  Mass.  494,  90  N.  E.  851. 
8  French  v.  Powell,  135  Cal.  636,  68  Pac.  92. 

'  Empire  State  Surety  Co.  v.  Des  Moines,  152  Iowa,  531,  131  N.  W.  870, 
152  Iowa,  552,  132  N.  W.  837. 

*  Friedman  v.  Hampden  County,  supra. 

470 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  331 

of  a  public  work  are  materials  within  the  bond,  since 
they  are  used  directly  upon  the  work  in  the  process  of 
construction  to  bring  it  into  proper  form  and  condition 
and  are  entirely  consumed  in  the  use.^  In  like  manner 
coal  used  upon  the  work  is  also  material  or  supplies  neces- 
sary for  the  construction  of  the  work  and  so  comes  within 
such  terms  of  a  bond.-  When,  however,  the  terms  of  the 
bond  relate  to  the  materials  supplied  in  accordance  with 
the  contract  and  specifications,  which  do  not  include  coal, 
even  though  it  is  necessarily  used  as  an  aid  to  the  work  it 
is  not  within  the  bond.^  Provisions  or  board  furnished  to 
men  or  merchandise  or  goods  given  through  store  orders  as 
wages  are  not  included  usually  within  a  bond.  Money 
loaned  to  furnish  the  pay  roll  for  labor  upon  the  work  is 
not  within  the  bond.*  Hay  and  grain  used  to  feed  teams 
used  upon  the  work  for  purposes  of  construction  are,  how- 
ever, covered  by  the  bond.^  So  are  the  teams  furnished,^ 
but  money  expended  for  cartage,  towing  or  dockage  is  not 
one  of  the  objects  intended  by  the  bond  and  will  not 
support  a  suit.^  A  claim  for  the  rental  of  scrapers  is  not 
labor  performed  or  materials  furnished  on  a  public  work.^ 
Planks  used  for  sheathing  and  left  in  place  together  with 
piles  driven  into  the  work  come  within  the  bond.^ 

1  Geo.  H.  Sampson  Co.  v.  Comm.,  supra;  E.  I.  Du  Pont  De  Nemours  P.  Co. 
V.  Culgin  Pace  Cont.  Co.,  206  Mass.  585,  92  N.  E.  1023;  Kansas  City  use  of 
Kansas  City  H.  P.  B.  Co.  v.  Youmans,  213  Mo.  151,  112  S.  W.  225. 

2  Zipp  V.  Fid.  &  D.  Co.,  73  N.  Y.  App.  Div.  20;  National  Surety  Co.  v. 
Brotnaber  L.  Co.,  67  Wash.  601,  122  Pac.  337;  Contra,  George  H.  Sampson 
Co.  V.  Comm.,  supra. 

3  Philadelpia  v.  M  alone,  214  Pa.  90,  63  Atl.  539;  Alpena  use  of  Gilchrist «;. 
Title  G.  &  T.  Co.,  168  Mich.  350,  134  N.  W.  23. 

*  Cadenasso  v.  Antonelle,  127  Cal.  382,  59  Pac.  765. 

*  National  Surety  Co.  v.  Bratnaber  L.  Co.,  supra. 
8  French  v.  Powell,  135  Cal.  636,  68  Pac.  92. 

^  Alpena  ex  rel.  Beaudrie  v.  Murray  Co.,  159  Mich.  336,  123  N.  W.  1128. 
8  HaU  V.  Cowen,  51  Wash.  295,  98  Pac.  670. 
6  Geo.  H.  Sampson  Co.  f.  Comm.,  supra. 

471 


§  332  ]  PERFORMANCE   AND   BREACH  [  PART  V 

§  332.  What  Labor  and  Materials  Included  under  Federal 
Act. 
Technical  rules  otherwise  protecting  sureties  from  liabil- 
ity are  never  applied  in  proceedings  under  the  federal  act.^ 
The  federal  act  requiring  a  contractor  to  furnish  a  bond  to 
pay  for  labor  and  materials  used  on  the  work  is  not  limited 
to  labor  and  materials  directly  incorporated  into  the  public 
work  but  includes  anything  which  is  an  integral  part  of  the 
work,  and  necessarily  involved  in  it,  anything  indispensable 
to  the  prosecution  of  the  work  and  used  exclusively  in  its 
performance.-  The  act  is  to  be  construed  liberally  for  the 
protection  of  those  who  furnish  labor  or  materials  in  the 
prosecution  of  public  work,^  Where  a  contractor  runs  a 
boarding  house  not  as  an  independent  enterprise,  but  as  an 
indispensable  and  integral  part  of  the  work,  groceries  sold 
to  the  contractor  and  consumed  by  the  laborers  are 
materials  supplied  and  used  in  the  prosecution  of  the  work, 
and  recovery  for  their  value  may  be  had  against  the  bond.'* 
Coal  furnished  to  operate  engines  on  dredges  has  been  con- 
sidered material  used  in  the  prosecution  of  the  work.^ 
Claims  allowed  agaimt  the  bond  include  not  only  cartage 
and  towage  of  material,  but  also  claims  for  drawings  and 
patterns  used  by  the  contractor  in  making  molds  for  cast- 
ings which  enter  into  the  construction  of  a  ship.*^  Where 
the  work  contracted  for  was  building  a  breakwater,  recov- 
ery was  allowed  for  labor  at  a  quarry  operated  fifty  miles 

1  Illinois  Surety  Co.  v.  Davis  Co.,  244  U.  S.  37G,  61  L.  Ed.  1206,  aff'g  226 
Fed.  653. 

2  Brogan  v.  National  Surety  Co.,  246  U.  S.  257,  62  L.  Ed.  703. 
'  Idem,. 

6  City  Trust  S.  &  D.  Co.  v.  U.  S.,  147  Fed.  155;  U.  S.  use  of  Lyman  Coal 
Co.  V.  U.  S.  F.  &  G.  Co.,  82  Vt.  94,  71  Atl.  1106,  83  Vt.  278,  75  Atl.  280. 

8  Title  G.  &  T.  Co.  v.  Crane  Co.,  219  U.  S.  24,  34,  55  L.  Ed.  72,  aff'g  163 
Fed.  168;  Amer.  Surety  Co.  v.  Lawrenceville  Cement  Co.,  110  Fed.  717. 

472 


CHAP.  XLVIII  ]  BOND    OF   CONTRACTOR  [  §  333 

distant.  This  included  the  labor  not  only  of  men  who 
stripped  the  earth  to  get  at  the  stone  and  who  removed  the 
debris,  but  carpenters  and  blacksmiths  who  repaired  the 
cars  and  track  equipment  used  to  haul  stone  to  the  quarry 
dock.  It  included  also  the  wages  of  the  men  who  drove 
the  horses  which  hauled  the  cars  on  the  track.  ^  Rental  for 
cars,  track  and  other  equipment  used  by  a  contractor  in 
facilitating  his  work  as  well  as  the  expense  of  loading  this 
equipment  and  the  freight  paid  to  transport  it  to  the  site 
of  use  was  allowed  against  the  bond.^  Since  the  basis  of 
recovery  is  supplying  labor  and  material  for  the  public 
work,  he  who  supplies  them  to  a  subcontractor  may  claim 
under  the  bond,^  even  if  the  subcontractor  has  been  fully 
paid.^  But  money  loaned  to  meet  the  pay  roll  of  the  con- 
tractor will  not  give  rise  to  a  claim  under  the  act.^  Pat- 
terns furnished  to  the  molding  department  of  a  con- 
tractor building  a  government  vessel  are  within  the 
bond.^  Freight  and  demurrage  paid  on  timber  used  on 
the  work  may  constitute  the  subject  of  suit  under  the 
federal  act.^ 

§  333.  Limitations  on  Proceedings  under  Federal  Act. 

The  material  men's  act  of  1894  as  amended  by  act  of 
1905  is  intended  to  be  highly  remedial.  Its  purpose  is  to 
give  a  remedy  to  material  men  and  laborers  on  the  bond  of 

1  U.  S.  Fid.  Co.  V.  Bartlett,  231  U.  S.  237,  58  L.  Ed.  200,  aff'g  189  Fed.  339. 

2  Illinois  Surety  Co.  v.  Davis  Co.,  244  U.  S.  376,  61  L.  Ed.  1206,  aff'g  226 
Fed.  653.  See  U.  S.  ex  rel.  McAllister  v.  Fid.  &  D.  Co.,  86  N.  Y.  App.  Div. 
475. 

3  U.  S.  V.  Jack,  124  Mich.  210,  82  N.  W.  1049. 

'  Mankin  v.  Ludowici-Celadon  Co,.  215  U.  S.  533,  54  L.  Ed.  315,  aff'g  158. 
Fed.   1021. 

5  Hardaway  v.  National  Surety  Co.,  211  U.  S.  552,  53  L.  Ed.  321,  aff'g 
150  Fed.  465;  Fidelity  Nat.  Bank  v.  Rundle,  107  Fed.  227. 

« Title  G.  &  T.  Co.  v.  Crane  Co.,  219  U.  S.  24,  34,  55  L.  Ed.  72,  aff'g  163 
Fed.   168. 

7  U.  S.  use  of  Nicola  v.  Hegeman,  204  Pa.  St.  438,  54  Atl.  344. 

473 


§  333  ]  PERFORMANCE  AND  BREACH        [  PART  V 

the  original  contractor  and  a  reasonable  time  to  enforce  it, 
and  in  a  single  proceeding  to  unite  all  claimants.^  Where 
there  is  a  conflict  in  its  provisions  these  will  be  adapted  to 
fulfill  its  whole  purpose,  and  those  provisions  fittest  to 
accomplish  that  result  will  prevail.^  The  act  provides  for 
the  execution  of  a  bond  by  any  person  entering  into  any 
formal  contract  with  the  United  States  for  any  public 
work  and  that  in  any  action  instituted  by  the  United 
States  any  person  who  has  furnished  materials  or  labor  to 
the  contractor  may  intervene  and  become  a  party  to  the 
action.  If  no  action  is  brought  by  the  government  within 
six  months  from  the  completion  and  final  settlement  of  the 
contract,  then  any  person  furnishing  labor  or  materials  may 
bring  suit  in  the  name  of  the  United  States  in  the  district 
court  of  the  United  States  in  which  the  contract  was  to  be 
performed  and  executed  irrespective  of  the  amount  in 
controversy  for  his  or  their  use  and  benefit  against  the 
contractor  and  his  sureties.^  No  right  of  action  accrues  to 
a  material  man  until  the  time  reserved  to  the  United  States 
to  sue  has  expired.^  The  provision  of  the  statute  requiring 
notice  to  be  given  to  other  creditors,  by  the  creditor  insti- 
tuting the  single  proceeding  allowed  where  the  government 
has  not  sued,  is  directory  merely.  It  was  never  intended  to 
give  to  a  surety  company  a  right  to  have  done  that  which  it  is 
its  interest  not  to  have  performed.  The  provision  for  notice, 
therefore,  is  not  of  the  essence  of  jurisdiction  over  the  case 
nor  a  condition  of  liability  of  the  surety  on  the  bond.^ 

§  334.  Who  are  Beneficiaries  under  Statute. 

Where  the  Nation,  the  State  or  a  municipal  subdivision 

1  A.  Bryant  Co.  v.  N.  Y.  Steam  Fitting  Co.,  235  U.  S.  327,  59  L.  Ed.  253. 
^  Idem. 

*  Texas  Cement  Co.  v.  McCord,  233  U.  S.  157,  58  L.  Ed.  893. 
^  A.  Bryant  Co.  v.  N.  Y.  Steam  Fitting  Co.,  supra. 

474 


CHAP.  XLVIII  ]  BOND    OF    CONTRACTOR  [  §  333 

of  the  State  seeks  to  protect  its  inhabitants  in  pubUc  con- 
tracts by  covenants  for  their  benefit,  the  persons  intended 
as  beneficiaries  may  sue  directly  to  enforce  such  covenants, 
and  may  recover  the  loss  suffered  by  them  in  so  far  as  they 
are  protected  by  such  covenants.  Where  accordingly 
bonds  are  given  upon  public  contracts  for  the  pajmaent  of 
wages  to  laborers  or  to  pay  the  claims  of  material  men, 
these  may  sue  upon  such  bonds  and  recover  the  amount 
of  such  wages  or  of  the  claims  for  material  against  the 
surety.  But  unless  there  is  an  intention  to  include  them 
in  the  contract  or  the  State  has  some  interest  in  protecting 
them,  the  bond  will  not  be  extended  to  cover  these  claims.^ 

§  335.  Who  are  Beneficiaries  under  Statute — Subcon- 
tractors. 
Bonds  given  by  contractors  to  protect  material  men  and 
laborers  inure  to  the  benefit  of  subcontractors  under  State 
and  municipal  statutes  ^  and  under  the  broad  scope  of  the 
federal  act  are  of  course  included.^  Even  in  those  States 
where  a  strict  rule  is  followed  excluding  subcontractors  from 
participating  in  the  benefits  of  the  bond,  he  is  often  let  into 
these  by  a  construction  which  makes  him  a  material  man.* 

§  336.  When    Bond    Runs    to    Public    Body— Rights    of 
Laborers  and  Material  Men. 

Where  the  bond  given  by  a  contractor  to  pay  wages  of 

1  Wilson  V.  Whitmore,  92  Hun,  466,  157  N.  Y.  693,  51  N.  E.  1094;  Fosmire 
V.  National  Surety  Co.,  229  N.  Y.  44,  127  N.  E.  472;  Eastern  Steel  Co.  v. 
Globe  Indem.  Co.,  227  N.  Y.  586,  125  N.  E.  917;  Buffalo  Cement  Co.  v.  Mc- 
Naughton,  90  Hun,  74,  156  N.  Y.  702,  51  N.  E.  1089.  See  Argyle  v.  Plunkett, 
226  N.  Y.  306,  124  N.  E.  1. 

2  Combs  V.  Jackson,  69  Minn.  336,  72  N.  W.  565;  Daly  v.  Jackson,  69  Minn. 
342,  72  N.  W.  568;  Philadelphia  v.  Nichols  Co.,  214  Pa.  St.  265,  63  Atl.  886; 
Ihrig  V.  Scott,  5  Wash.  584,  32  Pac.  466;  Contra,  People  use  of  Winkle  T.  C. 
Co.  V.  Cotteral,  119  Mich.  27,  77  N.  W.  312. 

3  U.  S.  use  of  CroU  v.  Jack,  124  Mich.  210,  82  N.  W.  1049. 

« People  use  of  Emack  v.  Thompson,  119  Mich.  21,  77  N.  W.  314. 

475 


§  336  ]  PERFOKMANCE   AND   BREACH  [  PART  V 

laborers  and  claims  of  material  men  runs  to  the  State  or  the 
municipality,  some  jurisdictions  hold  that  laborers  and  ma- 
terial men  cannot  sue  upon  the  contract.^  There  is,  however, 
a  substantial  current  of  authority  which  holds  that  in  sub- 
stance and  in  purpose  the  bond  was  given  to  pay  obligations 
to  these  third  persons,  and  they  readily  find  the  existence  of 
an  intention  to  benefit  them  and  a  duty,  legal  or  equitable, 
which  gives  a  just  claim  to  enforce  the  bond  directly  and 
in  their  own  names  against  the  surety.^  Some  jurisdictions 
sustain  the  doctrine  of  the  right  of  a  laborer  or  material  man 
to  sue  but  hold  that  the  bond  sued  on  must  show  a  promise  to 
pay  for  labor  and  materials  furnished,  and  an  intention  to 
benefit  those  furnishing  labor  and  material  and  when  these 
characteristics  exist  in  the  bond  find  no  difficulty  in  enforc- 
ing it.^ 

When  these  bonds  are  given  pursuant  to  a  statute,  the 
courts  very  generally  carry  out  liberally  the  remedial  pur- 
poses of  the  statute  and  allow  the  beneficiaries  under  the 
bond  and  statute  to  sue  directly  upon  the  bond."*  Where 
the  statutes  either  of  the  State  or  Nation  do  not  admit  of  a 
mechanic's  lien  being  filed  against  public  work  the  courts 

1  Searles  v.  Flora,  225  III.  167,  80  N.  E.  98;  Fosmire  v.  Nat.  Surety  Co.,  229 
N.  Y.  44,  127  N.  E.  472;  Eastern  Steel  Co.  v.  Globe  Indem.  Co.,  227  N.  Y.  586, 
125  N.  E.  917;  Buffalo  Cement  Co.  v.  McNaughton,  90  Hun,  74,  156  N.  Y. 
702,  51  N.  E.  1089;  Village  of  Argyle  v.  Plunkett,  226  N.  Y.  306,  124  N.  E.  1; 
Hipwell  V.  National  Surety  Co.,  130  Iowa,  656,  105  N.  W.  318;  Elec.  Appliance 
Co.  V.  U.  S.  Fid.  &  G.  Co.,  110  Wis.  434,  85  N.  W.  648. 

2  Nat.  Surety  Co.  v.  Foster  Lumber  Co.,  42  Ind.  App.  671,  85  N.  E.  489; 
Williams  v.  Markland,  15  Ind.  App.  669,  44  N.  E.  562;  Devers  v.  Howard, 
144  Mo.  671,  46  S.  W.  625;  Sch.  Dist.  ex  rel.  Koken  I.  Wks.  v.  Livers,  147 
Mo.  580,  49  S.  W.  507;  Burton  v.  Larkin,  36  Kan.  246,  13  Pac.  398;  Doll  v. 
Crume,  41  Neb.  655,  59  N.  W.  806;  Kauffman  v.  Cooper,  46  Neb.  644,  65 
N.  W.  796. 

2  Parker  v.  Jeffery,  26  Oreg.  186,  37  Pac.  712;  St.  Louis  v.  G.  H.  Wright 
Cont.  Co.,  202  Mo.  451,  101  S.  W.  6;  Wilson  v.  Whitmore,  92  Hun,  466,  157 
N.  Y.  693,  51  N.  E.  1094;  Montgomery  v.  Rief,  15  Utah,  495,  50  Pac.  623. 

<Bohn  V.  McCarthy,  29  Minn.  23,  11  N.  W.  127;  Morton  v.  Power,  33 
Minn.  521,  24  N.  W.  194;  Wilson  v.  Whitmore,  92  Hun,  466,  157  N.  Y.  693, 
51  N.  E.  1094;  Baum  v.  Whatcom  County,  19  Wash.  626,  54  Pac.  29. 

476 


CHAP.  XLVIII  ]  BOND    OF   CONTRACTOR  [  §  336 

readily  support  the  purpose  of  these  statutes,  requiring  the 
giving  of  a  bond  to  pay  laborers  and  material  men,  as  a 
substitute  for  a  Hen.^     Thus  where  the  condition  of  the 
bond  is  in  effect  to  pay  all  laborers  and  material  men  for 
labor  performed  or  materials  furnished,  the  bond  gives  a 
clear  right  to  such  claimants  to  sue  upon  it.^     Where  a 
bond,  read  in  its  entirety,  is  inconsistent  with  an  intention 
that  a  laborer  and  others  in  like  position  should  have  the 
right  to  sue  on  it,  such  right  will  be  denied.    Such  intention 
is  negatived  when  the  dominant  purpose  of  the  bond  is  pro- 
tection  to   the  State  or  other  public   body.     If  laborers 
ignoring  the  people  may  sue  in  their  own  right  as  often  as 
there  is  default,  such  dominant  purpose  may  be  defeated, 
by  the  exhaustion  of  the  penalty  of  the  bond  and  the  leav- 
ing  of   notliing   to   satisfy   any   demands   of   the    State. ^ 
Where  a  bond  is  conditioned  for  the  payment  of  wages 
and  nothing  else  the  intention  to  confer  a  right  of  suit  will 
be  the  more  readily  inferred  since  the  State  has  an  interest 
in   those  who   labor  upon  public   works.     The  intent   to 
benefit  them  and  the  existence  of  the  duty  would  then 
give  a  right  of  action  upon  a  contractor's  bond."*    Of  course 
where  the  people  sue  upon  such  a  bond  for  the  benefit  of 
laborers  the  right  of  suit  and  the  right  of  recovery  exist 
in  the  State  as  trustee  to  collect  moneys  due  such  laborers 

1  King  V.  Downey,  24  Ind.  App.  262,  56  N.  E.  680;  U.  S.  use  of  Vermont 
Marble  Co.  v.  Burgdorf,  13  App.  D.  C.  506;  Kansas  City  Hyd.  P.  B.  Co.  v. 
Nat.  Surety  Co.,  149  Fed.  507;  U.  S.  use  of  Hill  v.  Amer.  Surety  Co.,  200  U.  S. 
197,  50  L.  Ed.  437. 

2  Fitzgerald  v.  McClay,  47  Neb.  816,  66  N.  W.  828;  HipweU  v.  National 
Surety  Co.,  130  Iowa,  656,  105  N.  W.  318;  Williams  v.  Markland,  15  Ind.  App. 
669,  44  N.  E.  562;  U.  S.  Gypsum  Co.  v.  Gleason,  135  Wis.  539,  116  N.  W. 
238;  Gastonia  v.  McEntee  Peterson  E.  Co.,  131  N.  C.  363,  42  S.  E.  858;  E. 
I.  Du  Pont  De  Nemours  P.  Co.  v.  Culgin  Pace  Cont.  Co.,  206  Mass.  585,  92 
N.  E.  1023;  Nelson  Co.  v.  Stephenson,  168  S.  W.  (Tex.)  61;  Amer.  Surety 
Co.  V.  Raeder,  15  Ohio  C.  C.  47,  61  Ohio  St.  661,  57  N.  E.  1130. 

3  Fosmire  v.  National  Surety  Co.,  229  N.  Y.  44,  127  N.  E.  472. 
*  Idem. 

477 


§  336  ]  PERFORMANCE  AND  BREACH        [  PART  V 

and  material  men  as  well.  Where  the  right  is  directly  con- 
ferred upon  a  laborer  or  material  man  to  sue  in  his  own. 
name  upon  a  bond  he  can  bring  such  suit  provided  he 
knew  of  the  existence  of  the  bond  and  furnished  the  labor 
or  materials,  reljdng  upon  it  even  where  the  bond  runs  to 
the  State  or  other  public  body.^ 

§  337.  Condition  of  Bond  of  Contractor  for  Faithful  Per- 
formance of  Work — Indemnity  for  Public  Body. 

A  bond  conditioned  for  the  faithful  performance  of  the 
work  is  a  bond  for  the  indemnity  of  the  public  body 
merely  and  laborers  and  material  men  cannot  sue  upon 
such  bond  to  recover  wages  or  moneys  due  them,^  unless 
it  appears  to  have  been  the  clear  purpose  and  intent  of  the 
bond  to  permit  of  such  suit  to  satisfy  their  claims  as  within 
the  protection  of  the  bond.^ 

§  338.  For  Negligence  in  Doing  Work. 

Where  a  bond  is  taken  by  a  municipality  to  protect  it- 
self against  loss  occasioned  by  the  negligence  of  the  con- 
tractor for  his  failure  to  comply  with  laws  and  ordinances, 
such  bond  cannot  make  the  public  body  liable  if  it  is 
otherwise  not  liable.  Taking  the  bond  cannot  increase  its 
liability  nor  will  it  give  a  right  of  action  against  the  pubUc 

1  Buffalo  Cement  Co.  v.  McNaughton,  90  Hun,  741,  156  N.  Y.  702,  51  N.  E. 
1089. 

2  Searles  v.  Flora,  225  111.  167,  80  N.  E.  98;  Sterling  v.  Wolf,  163  111.  467,  45 
N.  E.  218;  Buffalo  Cement  Co.  v.  McNaughton,  90  Hun,  74,  156  N.  Y.  702, 
51  N.  E.  1089;  Noyes  v.  Granger,  51  Iowa,  227,  1  N.  W.  519;  Elec.  Applicance 
Co.  V.  U.  S.  F.  &  G.  Co.,  110  Wis.  434,  85  N.  W.  648;  Lancaster  v.  Frescoln, 
192  Pa.  vSt.  452,  43  All.  961;  Puget  Sound  B.  &  T.  Co.  v.  Sch.  Dist.  Kings  Co., 
12  Wash.  118,  40  Pac.  608;  Parker  v.  Jeffery,  26  Oreg.  186,  37  Pac.  712;  Hart 
t'.  State,  120  Ind.  83,  21  N.  E.  654,  24  N.  E.  151;  Green  Bay  Lumber  Co.  v. 
Indep.  Sch.  Dist.,  121  Iowa,  663,  97  N.  W.  72.  See  Kansas  City  ex  rel.  v. 
Blum  V.  O'Connell,  99  Mo.  357,  12  S.  W.  791. 

3  St.  Louis  V.  Von  Phul,  133  Mo.  561,  34  S.  W.  843;  Lyman  v.  Lincoln,  38. 
Neb.  794,  57  N.  W.  531. 

478 


CHAP.  XLVIII  ]  BOND    OF   CONTRACTOR  [  §  340 

body  or  even  permit  suit  against  the  surety  by  third  per- 
sons injured  since  its  purpose  is  to  indemnify  the  public 
body.^ 

§  339.  Obligation  of  Public  Body  to  Retain  Money  Due 
Contractor  Who  Fails  to  Pay  for  Labor  and 
Material. 

Simply  because  a  pubhc  body  exacts  a  bond  to  pay 
laborers  and  material  men  will  not  make  it  trustee  for  the 
purpose  of  enforcing  the  rights  of  other  parties  accruing 
because  of  the  delinquency  of  the  contractor.  The  first 
duty  of  a  pubhc  body  is  to  protect  its  own  rights  under  a 
contract  and  not  subordinate  these  to  collateral  rights  of 
others.  If  it  promises  to  pay  money  to  its  contractor  it  is 
under  obligation  so  to  do,  and  is  powerless  to  do  otherwise. 
The  pubhc  body  has  no  right,  therefore,  to  withhold  money 
due  its  contractor  where  he  defaults  in  paying  laborers  or 
material  men.  Even  if  the  surety  requests  the  public  body 
to  withhold  the  money  the  latter  has  no  obligation  or  right 
to  do  so  and  neglects  no  duty  it  owes  the  surety  by  refus- 
ing to  enforce  the  contractor's  obligation  toward  his 
materialmen  or  laborers.- 

§340.  Failure  of  Public  Body  to  Hold  Reserved  Fund 
Retained  under  Contract  will  Release  Surety — 
When  not  as  to  Laborers  and  Material  Men. 

The  general  rule  applicable  to  hired  and  other  sureties  is 
that  the  surety  is  discharged  from  the  bond  if  the  pubhc 
body  for  whom  work  is  being  performed  fails  to  retain  the 
percentage  fixed  by  the  contract.^    But  this  violation  of  the 

1  Kansas  City  ex  rel.  Blum  v.  O'Connell,  99  Mo.  357,  12  S.  W.  791;  Terry 
V.  Richmond,  94  Va.  637,  27  S.  E.  429;  Moss  v.  Rowlett,  112  Ky.  121,  65  S  W 
153;  Redditt  v.  Wall,  55  So.  (Miss.)  45. 

2  American  Surety  Co.  v.  Bd.  of  Waseca  County,  77  Minn.  92,  79  N.  W. 
649;  Philadelphia  v.  McLinden,  205  Pa.  St.  172,  54  Atl.  719. 

2  Lucas  County  v.  Robert,  49  Iowa,  159;  Gray  v.  Sch.  Dist.,  35  Neb.  438,  53 

479 


§  340  PERFORMANCE  AND   BREACH  [  PART  V 

contract  by  the  public  body  will  not  release  the  surety  as 
to  laborers  and  material  men  for  any  moneys  due  to  them^ 
before  such  overpayment.^ 

§  341.  Obligation  of  Surety — Release  of  Surety  Through 
Failure  of  Creditors  of  Contractor  to  File  Claims 
and  Secure  Preference. 
Where  by  statute  subcontractors,  laborers  and  material 
men  are  given  a  preference  out  of  funds  due  a  contractor 
upon  public  work  provided  they  file  a  statement  of  their 
demand  with  the  public  officer  through  whom  payment  for 
the  work  is  to  be  made,  if  these  laborers,  material  men  or 
subcontractors  fail  to  file  their  claims  this  will  not  release 
the  surety.  A  creditor  does  not  release  a  surety  by  not 
enforcing  his  claim,  unless  he  fails  in  some  duty  assumed 
to  the  surety  by  the  contract,  express  or  implied,  or  fails 
to  sue  when  notified  by  a  surety  as  provided  by  statute  or 
fails  to  preserve  some  lien  or  security  which  he  has  for  the 
principal's  debt.  His  right  of  preference  is  not  a  lien,  and 
the  creditor  is  therefore  not  bound  to  any  active  diligence 
in  enforcing  his  claim  against  the  principal.  It  is  the  debt 
of  the  surety  as  well.     While  a  creditor  cannot  do  any  act 

N.  W.  377;  Glenn  County  v.  Jones,  146  Cal.  518,  80  Pac.  695;  Neilson  v.  Title 
G.  &  S.  Co.,  81  Oreg.  422,  159  Pac.  1151;  O'NeUl  v.  Title  G.  &  T.  Co.,  191 
Fed.  570;  Prairie  State  Nat.  Bk.  v.  U.  S.,  164  U.  S.  227,  41  L.  Ed.  412,  aff'g 
27  Ct.  CI.  185;  Morgan  v.  Salmon,  18  N.  M.  73,  135  Pac.  553;  Wasco  Co.  v. 
New  England  Equit.  Ins.  Co.,  88  Oreg.  465,  172  Pac.  126,  L.  R.  A.  1918  D. 
732;  Jersey  City  W.  S.  Co.  v.  Metropolitan  Cons.  Co.,  76  N.  J.  L.  419,  69 
Atl.  1088;  National  Surety  Co.  v.  Long,  79  Ark.  523,  96S.W.  745;Pauly  Jail 
Bldg.  &  M.  Co.  V.  Collins,  138  Wis.  494,  120  N.  W.  225;  New  Haven  v.  Nat. 
SteamEconomizerCo.,79Conn.  482,  65  Atl.  959;  Chicago  ?;.  Agnew,  264  111. 
288,  106  N.  E.  252.  See  HipweU  v.  Nat.  Surety  Co.,  130  Iowa,  656,  105  N  .W. 
318 

1  U.  S.  Fid.  &  G.  Co.  V.  American  Blower  Co.,  41  Ind.  App.  620,  84  N.  E. 
555;  Conn  v.  State,  125  Ind.  514,  25  N.  E.  443;  Empire  State  Surety  Co.  v. 
Des  Moines,  1.52  Iowa,  531,  131  N.  W.  870;  U.  S.  v.  Nat.  Surety  Co.,  92  Fed. 
549;  Kansas  City  Sch.  Dist.  v.  Livers,  147  Mo.  580,  49  S.  W.  507;  Bethany  v. 
Howard,  149  Mo.  504,  51  S.  W.  94;  Kauffman  v.  Cooper,  46  Neb.  644,  65 
N.  W.  796;  Amer.  Surety  Co.  v.  Waseca  Co.,  77  Minn.  92,  79  N.  W.  649. 

480 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  343 

mjurious  to  the  surety  or  inconsistent  with  the  surety's 
rights,  he  may  remain  entirely  passive  and  rely  upon  the 
imdertaking  of  the  surety.  He  is  not  bound  to  prosecute 
an  action  to  obtain  a  hen.  If  the  funds  in  the  hands  of 
the  pubhc  body  are  exhausted  in  paying  other  claims 
the  surety  is  still  liable.^ 

§  342.  Discharge  of  Bond  of  Contractor — Effect  on  Claims 
of  Laborers  and  Material  Men. 
If  in  the  performance  of  public  work  a  bond  is  required 
to  pay  claims  of  laborers  and  material  men  and  by  its  own 
terms  it  is  discharged  upon  acceptance  of  the  work  or 
structure,  this  operates  as  a  release  of  the  surety.-  This 
applies  in  the  case  of  a  material  man  especially  where  the 
public  body  in  good  faith  accepts  a  building,  before  the 
material  man  knew  of  the  existence  of  the  bond,  or  relied 
upon  it  in  any  way.^  Public  corporations  are  under  no  ob- 
ligation to  protect  laborers  or  material  men,  and  if  they  de- 
sire protection  they  must  secure  their  claims  in  the  manner 
provided  by  a  particular  statute  or  make  their  claims 
within  the  time  limited  therefor,  and,  where  a  bond  is  an- 
nulled by  acceptance  of  the  work,  before  such  event  occurs.^ 

§  343.  Effect  of  Renewal  of  Contract. 

If  a  bond  is  given  for  a  stated  period,  the  limitation  of 
time  fixed  in  the  contract  and  specifically  mentioned  will 
control  and  will  measure  the  life  of  the  bond.  It  will  not 
be  extended  to  include  a  renewal  contract  which  in  con- 

1  Whitehouse  v.  Am.  Surety  Co.,  117  Iowa,  328,  90  N.  W.  727;  Read  v.  Amer. 
Surety  Co.,  117  Iowa,  10,  90  N.  W.  590;  PhUadelphia  v.  Pierson,  217  Pa.  St. 
193,  66  Atl.  321;  People  v.  Powers,  108  Mich.  339,  66  N.  W.  215. 

2  Internat.  Trust  Co.  v.  Keefe  Mfg.  Co.,  40  Colo.  440,  91  Pac.  915. 

*  Idem. 

*  Internat.  Trust  Co.  v.  Keefe  Mfg.  Co.,  supra;  Empire  State  Surety  Co.  v. 
Des  Moines,  152  Iowa,  631,  131  N.  W.  870;  Elec,  Appliance  Co.  v.  U.  S.  F.  & 
G.  Co.,  110  Wis.  434,  85  N.  W.  648. 

481 


§  343  ]  PERFORMANCE   AND   BREACH  [  PART  V 

templation  of  law  constitutes  a  separate  and  distinct  con- 
tract for  the  renewal  period.^  Of  course  if  no  new  con- 
tract is  required  the  obligation  of  the  bond  will  continue 
during  the  renewal. 

§  344.  Abandonment  of  Contract — Subrogation  by  Surety 
to  Rights  of  Public  Body — Priority  of  Assign- 
ments. 
The  provision  in  the  contract  that  the  public  body  will 
retain  a  certain  percentage  out  of  current  estimates  serves 
to  secure  the  public  body  against  non-performance  of 
the  contract  and  gives  the  public  body  the  right  to  hold 
these  funds  in  case  the  contractor  abandons  his  work 
in  order  to  pay  any  damage  it  may  suffer  thereby.^  This 
right  of  the  public  body  to  retain  these  percentages  enures 
from  the  time  the  contract  is  made;  and  until  its  claims 
and  claims  for  labor  and  material  as  provided  in  the  con- 
tract are  paid,  such  right  is  superior  to  any  equitable 
assignee  of  the  contractor.^  And  so  when  the  surety  on 
the  bond  of  the  contractor  pays  debts  incurred  by  the  con- 
tractor for  labor  and  material  it  is  entitled  to  be  subro- 
gated to  these  rights  of  the  public  body  against  the  fund 
in  preference  to  such  an  equitable  assignee,"*  because  the 
surety's  right  of  subrogation  is  bound  up  in  the  contract 
and  dates  back  to  the  time  when  it  entered  into  the  con- 
tract of  suretyship.^    This  is  so  for  the  further  reason  that 

1  U.  S.  use  of  Dist.  of  Columbia  v.  Bayly,  39  App.  D.  C.  105. 

2  First  Nat.  Bk.  v.  O'Neil  Eng.  Co.,  176  S.  W.  (Tex.)  74;  Wasco  County  v. 
New  England  Equit.  Ins.  Co.,  88  Oreg.  465,  172  Pac.  126,  L.  R.  A.  1918  D. 
732;  First  Nat.  Bk.  v.  City  Trust  Co.,  114  Fed.  529,  531;  Prairie  St.  Nat.  Bk. 
V.  U.  S.,  164  U.  S.  227,  232,  41  L.  Ed.  412,  aff'g  27  Ct.  CI.  185;  O'NeiU  v.  Title 
G.  &  T.  Co.,  191  Fed.  570;  Re  Scofield  Co.,  215  Fed.  45,  50. 

'  Wasco  County  v.  New  England  Equit.  Ins.  Co.,  supra. 

*  Wasco  County  v.  New  England  Equit.  Ins.  Co.,  supra;  Prairie  State  N. 
Bk.  V.  U.  S.,  supra;  Reid  v.  Pauley,  121  Fed.  652;  Hipwell  v.  National  Surety  Co., 
130  Iowa,  656,  105  N.  W.  318. 

'  Prairie  State  N.  Bk.  v.  U.  S.,  supra;  Henningsen  v.  U.  S.  F.  &  G.  Co.,  143 

482 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  345 

this  reserve  fund  is  as  much  for  the  protection  and  indemnity 
of  the  surety  as  it  is  for  the  security  of  the  pubHc  body,  and 
an  equity  in  such  fund  is  raised  in  behalf  of  the  surety.^  The 
right  of  subrogation  is  particularly  applicable  to  these  funds. 
This  right  cannot  be  defeated  by  a  bank  which  loans 
money  to  a  contractor  to  carry  on  his  work  and  takes  an 
assignment  to  secure  the  loan,  and  the  equity  of  the  surety 
and  his  priority  in  these  reserved  moneys  will  be  sustained 
as  against  such  an  assignee,  even  though  the  fund  is 
thereby  exhausted  and  nothing  is  left  for  the  bank 
assignee.^  The  bank  is  bound  to  know  of  the  rights  of  a 
surety  under  these  circumstances  and  will  be  deemed  to 
act  with  full  knowledge  of  a  surety's  rights.^ 

Where,  therefore,  the  surety  on  a  contractor's  bond  com- 
pletes work  abandoned  by  a  contractor,  such  surety  is 
entitled  to  moneys  under  the  contract,  sufficient  to  save 
him  from  loss  on  his  suretyship  contract,  and  such  right  is 
superior  to  any  assignment  made  by  the  contractor."* 

§  345.  Liability  of  Public  Officer  for  Failure  to  Take  Bond 

Required  by  Statute. 

Where  a  statute  does  not  in  terms  impose  liability  upon 

public  officers  for  failure  to  exact  a  bond  from  a  contractor 

to  pay  claims  of  laborers  and  material  men,  no  individual 

Fed.  810,  208  U.  S.  404,  411;  First  Nat.  Bk.  v.  City  Trust  S.  &  D.  Co.,  114 
Fed.  529;  National  Surety  Co.  v.  Berggren,  126  Minn.  188,  148  N.  W.  55; 
Wasco  Co.  V.  New  England  Equit.  Ins.  Co.,  supra. 

1  First  Nat.  Bank  v.  City  Trust  L.  D.  &  S.  Co.,  114  Fed.  529;  O'Neil  v. 
Title  G.  &  T.  Co.,  191  Fed.  570;  Re  Scofield  Co.,  215  Fed.  45;  First  Nat. 
Bk.  V.  Pesha,  99  Neb.  785,  157  N.  W.  924;  Maryland  Casualty  Co.  v.  Washing- 
ton N.  Bk.,  92  Wash.  497, 159  Pac.  689. 

2  Wasco  County  v.  New  England  Equit.  Ins.  Co.,  supra. 
^  Idem. 

*  Prairie  State  Nat.  Bk.  v.  U.  S.,  s^lpra;  First  Nat.  Bk.  v.  City  Trust  S.  D. 
&  S.  Co.,  114  Fed.  529;  Reid  v.  Pauly,  121  Fed.  652;  First  Nat.  Bk.  v.  Sch.  Dist., 
110  N.  W.  (Neb.)  349;  Gastonia  v.  McEntee  P.  Eng.  Co.,  131  N.  C.  359,  42 
S.  E.  857;  Contra,  Dowling  v.  Seattle,  22  Wash.  592,  61  Pac.  709. 

483 


§  345  ]  PERFORMANCE  AND  BREACH        [  PART  V 

liability  of  the  officers  will  ensue  so  as  to  make  them  sub- 
ject to  suit  for  such  omission.^  This  is  so  because  the  duty- 
imposed  is  upon  him  to  act  not  individually  but  as  a  public 
officer.  The  neglect,  therefore,  is  that  of  the  public  body, 
not  of  the  officer.^  But  where  the  duty  imposed  by  statute 
is  a  ministerial  duty,  the  material  men  or  laborers  injured 
by  breach  of  the  duty  may  sue  the  officers  for  failure  to 
perform  it  and  recover  of  them  individually.^  But  no 
recovery  will  be  permitted  unless  after  refusal  to  pay  by 
the  contractor  upon  demand,  or  upon  proof  of  insolvency.^ 
And  if  instead  of  complying  with  the  statute  the  bond  ob- 
tained is  a  good  conmion-law  bond  no  liability  of  the 
officer  for  not  obtaining  the  statutory  bond  can  arise, ^  es- 
pecially where  the  public  body  does  not  prevent  suit  by 
those  for  whose  benefit  it  was  received. 

§  346.  Obligation  Assumed  by  Public  Body  for  Failure  to 
Require  Contractor  to  Give  Statutory  Bond. 

When  the  duty  imposed  by  statute  upon  a  public  body 
to  obtain  a  bond  from  a  contractor  for  public  work  condi- 
tioned to  pay  the  claims  of  laborers  and  material  men  is  a 
public  duty  and  not  a  corporate  duty  the  public  body  is 
not  liable  for  its  failure  to  exact  the  bond.^  Where  of 
course,  the  statute  imposes  liability  upon  the  public  body 

1  Blanchard  v.  Burns,  110  Ark.  515,  162  S.  W.  63;  Hydraulic  P.  B.  Co.  v. 
Sch.  Dist.,  79  Mo.  App.  665;  Templeton  v.  Nipper,  107  Tenn.  548,  64  S.  W. 
889. 

^  Monnier  v.  Godbold,  116  La.  165,  40  So.  604;  Blanchard  v.  Burns,  supra. 

3  Owen  V.  Hill,  67  Mich.  43,  34  N.  W.  649;  Plummer  v.  Kennedy,  72  Mich. 
295,  40  N.  W.  433;  Smith  v.  Hubbell,  142  Mich.  637,  106  N.  W.  547;  Alpena 
use  of  Zes.s  v.  Title  G.  &  T.  Co.,  158  Mich.  678,  123  N.  W.  536. 

'  Michaels  v.  McRoy,  148  Mich.  577,  112  N.  W.  129. 

5  Stephenson  v.  Monmouth  Min.  &  Mfg.  Co.,  84  Fed.  114. 

« Freeman  v.  Chanute,  63  Kan.  573,  66  Pac.  647;  Ihk  v.  Duluth,  58  Minn. 
182,  59  N.  W.  960;  Contra,  Northwest  Steel  Co.  v.  Sch.  Dist.,  76  Oreg.  321, 
148  Pac.  1134. 

484 


CHAP.  XLVIII  ]  BOND   OF   CONTRACTOR  [  §  347 

for  failure  to  require  the  bond,  and  an  improper  and 
insufficient  bond  is  obtained  the  public  body  is  liable.^ 
If  public  corporations  are  not  mentioned  in  a  statute  which 
imposes  personal  liability  upon  an  owner  of  property  imder 
unprovement  for  failure  to  exact  a  good  and  sufficient 
bond  from  the  contractor  they  are  by  implication  ex- 
empted.2  But  where  recovery  is  allowed  none  can  be  had 
unless  it  is  shown  that  the  contractor  is  insolvent.  If 
the  material  man  or  laborer  should  know  from  the  public 
record  that  a  bond  has  been  given  he  is  chargeable  with 
his  own  negligence  and  cannot  recover  against  the  public 
body.^ 

§  347.  Condition  Precedent  to  Liability — Limitations. 

Where  a  statute  provides  that  a  verified  statement  of 
claim  must  be  filed  with  the  public  body  within  a  certain 
time  after  the  completion  of  the  work  or  structure,  the 
right  to  maintain  an  action  upon  the  contractor's  bond  is 
made  to  depend  upon  the  giving  of  such  notice  and  there- 
fore it  is  a  condition  precedent  to  the  maintenance  of  the 
action.  This  provision  is  for  the  benefit  of  sureties,  and 
when  no  claims  are  filed  within  the  time  lunited,  their 
liability  ceases.^ 

1  Wilcox  Lumber  Co.  v.  Sch.  Dist.,  103  Minn.  43,  114  N.  W.  262;  Scott 
Graff  Lumber  Co.  v.  Sch.  Dist.,  112  Minn.  474,  128  N.  W.  672;  Crab  Creek 
Lumber  Co.  v.  Othello,  81  Wash.  52,  142  Pac.  429. 

2  Barrett  Mfg.  Co.  v.  Bd.  of  Comm'rs,  133  La.  1022,  63  So.  505;  Wilcox 
Lumber  Co.  v.  Sch.  Dist.,  supra;  Contra,  Crab  Creek  Lumber  Co.  v.  Othello, 
81  Wash.  52,  142  Pac.  429;  Fransioli  v.  Thompson,  55  Wash.  259,  104  Pac.  278. 

» Woodward  Lumber  Co.  v.  Grantville,  13  Ga.  App.  405,  79  S.  E.  221. 
<  French  v.  Powell,  135  Cal.  636,  68  Pac.  92;  Huggins  v.  Sutherland,  39 
Wash.  552,  82  Pac.  112. 


485 


CHAPTER  XLIX 

LIQUIDATED  DAMAGES 

§  348.  General  Rule. 

It  seems  to  be  pretty  generally  recognized  that  these 
covenants  and  stipulations  in  pubUc  contracts  are  usually 
prepared  by  the  pubUc  body  and  in  most  instances  forced 
upon  a  contractor  who  must  take  them  without  bargain- 
ing, if  he  desires  to  be  permitted  to  bid  upon  the  contract. 
Nevertheless,  if  they  are  deliberately  entered  into  with  a 
full  understanding  of  their  purport,  and  the  amount  pro- 
vided is  not  disproportionate  to  the  actual  damage  or 
property  loss  suffered  and  is  not  unreasonable  or  oppres- 
sive, and  when  it  is  apparent  that  the  intention  of  the 
parties  was  to  provide  compensation  and  nothing  else,  the 
modem  tendency  is  to  enforce  them  and  not  to  construe 
them  as  a  penalty,  but  rather  to  treat  them  as  any  other 
covenant  in  the  contract  whose  true  intent  has  been  ascer- 
tained.^ The  modem  mle  affecting  such  stipulations  is  not 
to  look  upon  them  with  disfavor  or  constme  them  strictly 
as  penalties,  but  to  look  upon  them  with  candor,  if  not 
with  favor,  when  they  are  deliberately  entered  into  be- 
tween parties  who  have  equality  of  opportunity  for  under- 
standing and  insisting  upon  their  rights.  The  reason  for 
the  mle  is  that  such  stipulations  promote  prompt  perform- 
ance of  contracts  and  adjust  in  advance  and  amicably, 
matters,  the  settlement  of  which  through  the  courts  would 

» Wise  V.  U.  S.,  249  U.  S.  361,  63  L.  Ed.  647;  Hathaway  &c.  Co.  v.  U.  S., 
249  U.  S.  460,  63  L.  Ed.  707,  afif'g  52  Ct.  CI.  267. 

486 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  348 

involve  difficulty,  uncertainty,  delay  and  expense.^  The 
question  whether  the  stipulation  is  to  be  regarded  as  a 
penalty  or  as  liquidated  damages  is  to  be  determined  from 
a  fair  and  reasonable  construction  of  the  contract.  ^  When 
the  true  intention  of  the  parties  is  ascertained,  effect  will 
be  given  to  the  provision  as  freely  as  to  any  other  in  the 
contract,  as  long  as  the  actual  damages  are  uncertain  in 
their  nature  or  amount  or  are  difficult  of  ascertainment 
and  as  long  as  the  amount  stipulated  as  damages  is  not  so 
extravagant  or  disproportionate  to  the  actual  loss  as  to 
show  that  compensation  was  not  the  object  aimed  at  or  as 
to  imply  fraud,  mistake,  circumvention  or  oppression.^ 
Each  case  must,  of  course,  very  obviously  be  determined  by 
its  own  facts  and  circumstances.^  It  is  incumbent  upon 
the  party  claiming  the  stipulation  to  be  one  for  liquidated 
damages  to  show  that  it  was  the  intelhgent  and  deliberate 
purpose  of  the  contracting  parties  to  so  consider  it.  But 
when  the  intention  of  the  parties  has  finally  been  deter- 
mined as  well  as  how  they  regarded  the  provision,  whether 
it  was  considered  in  the  light  of  a  penalty,  or  as  liquidated 
damages  ascertained  and  fixed  by  the  agreement,  such 
intention  should  ordinarily  control.^  But  if  the  covenant 
violates  the  tests  above  set  forth,  and  by  its  consequences, 
and  these  seem  to  be  the  only  available  criteria,  it  shows 

^  Wise  V.  U.  S.,  supra. 

2  Wisei;.  U.  S.,  supra;  U.  S.  v.  Bethlehem  Steel  Co.,  205  U.  S.  105,  51  L.  Ed. 
731;  Dist.  of  Columbia  v.  Harlan  &c.  Co.,  30  App.  D.  C.  270;  Phoenix  I.  Co.  v. 
U.  S.,  39  Ct.  CI.  526;  Little  v.  Banks,  85  N.  Y.  258,  266;  Willson  v.  Baltimore, 
83  Md.  203,  34  Atl.  774;  New  Britian  v.  New  Britain  Tel.  Co.,  74  Conn.  326, 
50  Atl.  881. 

^  Wise  V.  U.  S.,  supra. 

*  Willson  i;.  Baltimore,  83  Md.  203,  34  Atl.  774;  Thompson  v.  St.  Charles 
County,  227  Mo.  220,  126  S.  W.  1044. 

5  Graham  v.  Lebanon,  240  Pa.  337,  87  Atl.  567;  U.  S.  v.  Bethlehem  Steel 
Co.,  supra;  Wise  v.  U.  S.,  supra;  Pacific  Hdw.  Co.  v.  U.  S.,  49  Ct.  CI.  327 
48  Ct.  CI.  399;  Crane  Co.  v.  U.  S.,  46  Ct.  CI.  343. 

487 


§  348  ]  PERFORMANCE  AND  BREACH        [  PART  V 

that  it  is  a  penalty,  because  it  is  oppressive,  or  unreason- 
able or  that  compensation  was  not  the  object  which  the 
clause  was  intended  to  fulfill  and  implied  fraud  circumven- 
tion or  mistake  arises,  then  the  courts  will  even  disregard 
the  explicit  words  of  the  parties  and  treat  the  stipulation 
as  a  penalty.^ 

§  349.  Construction  of  Stipulation  for  Liquidated  Damages. 

If  a  contract  provides  stipulated  damages  as  a  conse- 
quence of  a  breach,  this  is  the  one  measure  which  the 
law  will  consider.  Parties  are  free  to  make  contracts  as 
they  see  fit,  and  it  is  the  duty  of  the  courts  to  carry  out 
their  intention.  If  under  the  rules  just  considered  the 
stipulation  is  in  fact  one  which  the  courts  can  say  is  for 
specified  damages,  it  will  be  enforced  in  that  respect.  The 
remedy  which  the  parties  themselves  provide  will  ordinarily 
be  exclusive  and  must  be  enforced  according  to  its  terms.^ 
So  where  a  contract  to  furnish  armor  and  other  material 
pro\'ides  that  the  damage  for  delay  shall  be  computed 
from  the  date  set  for  final  completion,  the  dates  when 
installments  become  due  will  not  be  taken  into  account.^ 
If  the  contract  provides  that  should  the  contractor  fail  to 
commence  with  the  performance  of  the  work  on  the  day 
specified,  the  contract  may  be  annulled  and  all  money  or 
reserve  percentage  due  or  to  become  due  shall  be  forfeited, 
even  if  it  is  otherwise  provided  that  the  public  body  may 
relit  the  work,  this  will  not  give  it  the  right  to  charge 
the   contractor  with    the   excess  cost  on  reletting.     The 

1  Willson  V.  Baltimore,  supra;  McClintic  Marshall  C.  Co.  v.  Bd.  of  Free- 
holders, 83  N.  J.  Eq.  539,  91  Atl.  881. 

2  Stone  Sand  &  Gravel  Co.  v.  U.  S.,  234  U.  S.  270,  58  L.  Ed.  1308;  Carnegie 
Steel  Co.  V.  U.  S.  240  U.  S.  156,  60  L.  Ed.  576,  aff'g  49  Ct.  CI.  403;  Dennis 
V.  U.  S.,  5  Ariz.  313,  52  Pac.  353;  Parker-Washington  Co.  v.  Chicago,  267 
lU.  13G,  107  N.  E.  872. 

2  Carnegie  Steel  Co.  v.  U.  S.,  49  Ct.  CI.  403. 

488 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  351 

remedy  of  the  contract  is  exclusive  and  will  control.^ 
It  may  be  true  that  such  damages  are  inadequate,  but  this 
fact  will  not  permit  of  a  strained  construction  of  or  de- 
struction of  the  very  terms  of  the  agreement.^ 

§  350.  Time  of  Essence — Effect  of  Stipulation  Providing 
Remedy  for  Breach  of  Time  Clause. 

Where  a  contract  expressly  determines  the  consequences 
of  a  failure  to  begin  or  complete  work  on  time,  time  can- 
not be  considered  of  the  essence.  The  inherent  right  of 
annulment  and  the  consequent  right  to  recover  all  damages 
as  for  a  complete  breach  arise  out  of  the  common  law.  If 
the  parties  elect  to  deal  with  the  matter  by  express  stipula- 
tion that  is  the  end  of  it.  It  may  very  well  be  that  time  is 
made  vital,  but  if  the  contract  provides  also  for  the  conse- 
quences of  a  breach  the  benefits  and  burdens  of  the  con- 
tract must  be  taken  together.  Common-law  rights  of 
annulment  must  give  way  to  express  provisions  covering 
that  right.  Time  of  the  essence  becomes  of  no  moment 
where  the  contract  gives  the  mode  of  redress  for  a  failure 
of  observance  of  time,  except  to  give  the  relief  which  the 
contract  provides.^ 

§  351.  Money  Contracts. 

The  rules  governing  the  payment  of  liquidated  damages 
do  not  apply  to  contracts  calling  only  for  the  payment  of 
money.  Such  a  contract,  if  broken,  is  fully  satisfied  by 
payment  of  legal  interest  as  damages  during  the  period  of 
delay  or  for  the  breach.  Therefore  any  agreement  to  for- 
feit or  pay  a  larger  sum  because  of  a  default  in  the  pay- 

1  Stone  Sand  &  Gravel  Co.  v.  U.  S.,  234  U.  S.  270,  58  L.  Ed.  1308. 

2  Idem. 
'  Idem. 

489 


§  352  ]  PERFORMANCE   AND    BREACH  [  PART  V 

ment  of  a  lesser  amount  will  be  considered  a  penalty 
which  no  form  of  words  will  convert  into  liquidated  dam- 
ages.^ 

§  352.  When  Provision  is  not  Considered  a  Penalty. 

If  the  damages  are  at  all  uncertain  or  difficult  of  ascer- 
tainment the  parties  should  have  the  right  to  anticipate, 
stipulate  and  settle  them,  if  they  so  choose,  and  their  true 
intent  in  this  respect  should  be  enforced.  If  the  sum  is  not 
greatly  disproportionate  to  the  actual  damage  suffered 
and  is  required  to  be  paid  for  each  default,  or  per  diem,  or 
otherwise  periodically  during  the  default  it  will  be  con- 
sidered liquidated  damages.^  But  if  it  is  wholly  dispropor- 
tionate to  the  actual  damage,  no  matter  what  the  method 
of  computation,  it  will  be  treated  as  a  penalty.^  If  the 
contract  provides  for  payments  in  installments  as  the  work 
progresses  and  for  the  retaining  of  a  certain  percentage  of 
each  installment  as  security  for  full  performance,  the  provi- 
sion will  not  be  treated  as  liquidated  damages  but  rather 
as  a  penalty."*  To  construe  such  a  provision  as  one  fixing 
and  settling  the  damage  would  more  often  work  injustice 
than  fairness  shice  the  nearer  the  completion  of  the  work, 

'  Parker-Washington  Co.  v.  Chicago,  267  lU.  136,  107  N.  E.  872;  Graham  v. 
Lebanon,  240  Pa.  St.  337,  87  Atl.  567;  Loudon  v.  Taxing  District,  104  U.S. 
771. 

2  Heard  v.  Dooly  County,  101  Ga.  619,  28  S.  E.  986;  Ludlow  Valve  Mfg. 
Co.  V.  Chicago,  181  111.  App.  388;  Thompson  v.  St.  Charles  County,  227  Mo. 
220,  126  S.  W.  1044;  Summit  v.  Morris  County  T.  Co.,  85  N.  J.  L.  193,  88 
Atl.  1048;  White  v.  Braddock  Boro.  S.  D.,  159  Pa.  201,  28  Atl.  136;  Harris 
County  V.  Donald.son,  20  Tex.  Civ.  App.  9,  48  S.  W.  791;  Malone  v.  Phila- 
delphia, 147  Pa.  416,  23  Atl.  628;  Stephens  v.  Essex  Pk.  Comm.,  143  Fed.  844; 
Madison  v.  Amer.  San.  Eng.  Co.,  118  Wis.  480,  95  N.  W.  1097. 

3  McCann  v.  Albany,  11  App.  Div.  378,  158  N.  Y.  634,  53  N.  E.  673;  Hali- 
day  V.  U.  S.,  33  Ct.  CI.  453. 

*  Pigeon  V.  U.  S.,  27  Ct.  CI.  167;  Davis  v.  U.  S.,  17  Ct.  CI.  201;  Kennedy 
V.  U.  S.,  24  Ct.  CI.  122;  Satterleei;.  U.  S.,  30  Ct.  CI.  31;  Haliday  v.  U.  S.,  supra; 
Smith  V.  U.  S.,  34  Ct.  CI.  472;  Phoenix  I.  B.  Co.  v.  U.  S.,  39  Ct.  CI.  526;  Mundy 
V.  U.  S.,  35  Ct.  CI.  265;  Hughes  v.  U.  S.,  45  Ct.  CI.  517. 

490 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  353 

the  less  the  damage  and  the  greater  the  sum  retained, 
while  if  default  occur  shortly  after  the  work  begins,  the 
greater  would  be  the  damage  and  the  less  the  retained  per- 
centage with  which  to  satisfy  it.  Such  a  result  negatives 
an  intention  to  liquidate  damages,  especially  where  the 
right  is  reserved  to  recover  damages  in  addition  to  the 
sums  retained.^ 

§  353.  Where  Character  of  Clause  is  Doubtful — Doubt  as 
to  Amount  to  be  Paid. 
If  the  clause  under  consideration  as  a  stipulated  damage 
clause  creates  a  doubt  as  to  whether  the  provision  should 
be  construed  as  a  penalty  or  as  liquidated  damages,  the 
courts  will  regard  it  as  a  penalty.^  The  general  rule  is 
that  whether  the  amoimt  stated  is  denominated  as  "liqui- 
dated damages"  or  as  a  ''penalty,"  it  is  not  conclusive 
and  if  the  contract  leaves  the  intention  of  the  parties  in 
doubt  as  to  the  amount  to  be  paid  for  its  breach,  or  the 
amount  specified  is  beyond  all  reasonable  proportion  to  the 
damages  that  may  actually  be  sustained,  the  contract  will 
be  construed  as  a  penalty  only  and  not  as  liquidated 
damages,  though  it  be  specified  as  such.^  In  case  the 
clause  is  thus  treated  as  a  penalty,  only  actual  damages  are 
recoverable.* 

>  Hughes  V.  U.  S.,  45  Ct.  CI.  517.  See  Stone  Sand  &  Gravel  Co.  v.  U.  S.,  234 
U.  S.  270,  58  L.  Ed.  1308. 

2  Parker-Washington  Co.  v.  Chicago,  267  111.  136,  107  N.  E.  872;  Willson 
V.  Baltimore,  83  Md.  203,  34  Atl.  774;  Thompson  v.  St.  Charles  County,  227 
Mo.  220,  126  N.  W.  1044;  Moore  v,  Platte  County,  8  Mo.  467;  PhoenLx  I.  Co. 
V.  U.  S.,  39  Ct.  CI.  526;  United  Eng.,  etc.,  Co.  v.  U.  S.,  47  Ct.  CI.  489,  aff'd  234 
U.  S.  236,  58  L.  Ed.  1294. 

3U.  S.  V.  Bethlehem  Steel  Co.,  205  U.  S.  105,  51  L.  Ed.  731;  Willson  v. 
Baltimore,  supra;  Lamson  v.  Marshall,  133  Mich.  250,  95  N.  W.  78;  Salem 
V.  Anson,  40  Oreg.  339,  67  Pac.  190,  56  L.  R.  A.  169. 

*  Parker-Washington  Co.  v.  Chicago,  supra;  Thompson  v.  St.  Charles 
Countv,  supra;  Illinois  Surety  Co.  v.  U.  S.,  229  Fed.  527;  Pacific  Hardware 
Co.  V.  U.  S.,  49  Ct.  CI.  327,  s.  c.  48  Ct.  CI.  399. 

491 


§  354  ]         PERFORMANCE  AND  BREACH        [  PART  V 

§  354.  Effect  of  Calling  Clause   "  Liquidated  Damages." 

In  determining  the  question  of  whether  a  clause  for 
settled  damages  shall  be  treated  and  regarded  as  a  penalty, 
the  form  of  instrument  will  not  control;  the  intention  of 
the  parties  is  to  be  ascertained  and  will  govern,  for  the 
courts  look  beyond  the  mere  form  of  the  instrmnent  to  the 
subject  of  contract  and  to  the  consequences  which  will 
probably  flow  from  a  breach  of  its  terms  and  conditions. 
The  mere  calling  of  the  clause  a  ''liquidated  damage" 
clause  and  asserting  that  it  is  not  a  penalty,  will  not  alone 
guide  the  courts  in  deciding  this  question.  Such  language 
is  not  conclusive  when  the  clause  itself  in  its  results  vio- 
lates the  reasonable  limitations  heretofore  described.^ 

§  355.  Where  Subject-Matter  of  Contract  is  of  Uncertain 
Value. 

Where  the  subject-matter  of  the  contract  is  of  uncertain 
value  or  the  damages  to  be  paid  for  its  breach  are  inca- 
pable of  definite  ascertainment  by  any  fixed  rule,  the 
amount  stipulated  in  the  damage  clause  will  be  construed 
as  settled  or  liquidated  damages.  The  facts  of  each 
particular  case  must  be  considered  to  ascertain  whether  a 
particular  case  comes  within  this  rule.^ 

§  356.  Contract    Containing   Several   Distinct   and   Inde- 
pendent Covenants. 

If  the  agreement  contains  several  distinct  and  inde- 
pendent covenants  of  which  there  may  be  several  breaches, 
and  one  sum  is  stated  to  be  paid  upon  breach  of  perform- 

1  WilLson  V.  Baltimore,  83  Md.  203,  34  Atl.  774;  Ward  v.  Hudson  R.  B. 
Co.,  125  N.  Y.  230,  20  N.  E.  256;  Caesar  v.  Rubinson,  174  N.  Y.  492,  67  N.  E. 
58;  Chicago  House  Wrecking  Co.  v.  U.  S.,  106  Fed.  385.  See  Seidlitz  v.  Auer- 
bach,  230  N.  Y.  167,  129  N.  E.  461. 

2  Thompson  v.  St.  Charles  County,  227  Mo.  220,  126  S.  W.  1044. 

492 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  357 

ance,  that  sum  is  to  be  regarded  as  a  penalty  and  not  as 
liquidated  damages.^  In  like  manner  where  there  are 
several  undertakings  or  agreements  in  a  contract  of  differ- 
ent degrees  of  importance  and  the  damages  for  the  non- 
performance of  some  of  these  is  readily  ascertainable  and 
for  others  not,  or  the  loss  resulting  from  the  breach  of  some 
of  these  is  clearly  disproportionate  to  the  sum  sought  to  be 
fixed  as  liquidated  damages,  and  one  sum  is  named  as 
damages  for  a  breach  of  any  of  these  covenants,  such  sum 
will  be  regarded  as  a  penalty  only  and  will  not  be  treated 
as  liquidated  damages  for  the  breach  of  any  single  stipula- 
tion.2  This  rule  is  based  upon  the  fact  that  breaches  may 
vary  in  the  extent  of  resulting  damage,  since  each  act  per- 
formed is  not  usually  of  equal  importance.  One  stated 
sum,  therefore,  could  not  reasonably  have  been  indicated 
to  cover  any  of  these  breaches  of  varying  consequences.  If 
this  result,  which  the  courts  reach  is  to  be  obviated,  it 
can  only  be  overcome  by  providing  a  separate  sum  to  be 
paid  upon  each  separate  breach.  Of  course,  if  it  is  appar- 
ent that  the  contract  clause  for  stipulated  damages  relates 
to  the  performance  of  a  single  act  or  condition,  this  fact 
will  aid  the  court  in  determining  whether  it  was  the  inten- 
tion of  the  parties  to  liquidate  and  settle  the  damages 
rather  than  provide  a  penalty.' 

§  357.  When    Courts   Will   Regard   the   Provision   as   a 
Penalty. 
Whenever    it    is    apparent    that    the    damages    or    loss 

^  Lampman  v.  Cochran,  16  N.  Y.  275;  Thompson  v,  St.  Charles  County, 
227  Mo.  220,  126  S.  W.  1044. 

2  Parker-Washington  Co.  v.  Chicago,  267  111.  136,  107  N.  E.  872;  Daily  v. 
Litchfield,  10  Mich.  29;  Summit  v.  Morris  County  Traction  Co.,  85  N.  J.  L. 
193,  88  Atl.  1048;  Elyria  v.  Cleveland,  etc.,  R.  Co.,  23  Ohio  Cir.  Ct.  n.  s.  578; 
Madison  v.  American  San.  Eng.  Co.,  118  Wis.  480,  95  N.  W.  1097;  Madier  v. 
Silverstone,  55  Wash.  159,  104  Pac.  165,  34  L.  R.  A.  n.  s.  1. 

» Low  V.  Redditch  Local  Board,  1  Q.  B.  127. 

493 


§  357  ]  PERFORMANCE   AND   BREACH  [  PART  V 

suffered  are  easy  of  ascertainment,  the  courts  will  incline 
to  regard  the  clause  for  stipulated  or  settled  damages,  as  a 
penalty.^  The  difficulty  in  ascertaining  the  damages 
suffered,  is  given  great  weight  in  determining  whether  the 
clause  should  be  regarded  as  a  penalty  or  as  one  providing 
for  liquidated  damages.^  The  courts  incline  toward  treat- 
ing it  as  liquidated  damages  in  proportion  to  the  degree  of 
difficulty  in  ascertaining  the  actual  damages,  but  where 
the  amount  of  damages  provided  in  the  stipulation  is  un- 
conscionable, it  will  be  regarded  as  a  penalty.^  And  where 
the  sum  provided  is  unreasonable  in  comparison  with  the 
actual  damages  or  loss  suffered,  it  will  be  treated  as  a 
penalty.'*  When  the  amount  is  out  of  all  proportion  to  the 
actual  damages  suffered,  the  courts  look  upon  it  as  a 
penalty  to  guarantee  the  performance  and  not  as  liqui- 
dated damages.^  It  seems  to  be  equally  well  settled  that 
when  a  sum,  if  it  be  at  all  reasonable,  is  stipulated  to  be 
paid  as  liquidated  damages  for  the  breach  of  a  contract,  it 
will  be  regarded  as  such  and  not  as  a  penalty  where  from 
the  nature  of  the  covenant  the  damages  arising  from  its 

1  Nevada  County  v.  Hicks,  38  Ark.  557;  Willson  v.  Baltimore,  83  Md.  203, 
34  Atl.  774;  Thompson  v.  St.  Charles  County,  227  Mo.  220,  126  N.  W.  1044; 
St.  LouLs  V.  Parker-Washington  Co.,  271  Mo.  229,  196  S.  W.  767;  Davis  v.  U. 
S.,  17  Ct.  CI.  201;  Smith  Co.  v.  U.  S.,  34  Ct.  CI.  472. 

2  People  V.  Love,  19  Cal.  676;  Parker-Washington  Co.  v.  Chicago,  267  111. 
136,  107  N.  E.  872;  Ferber  Con.  Co.  v.  Bd.  of  Ed.  of  Hasbrouck  Heights,  90 
N.  J.  L.  193,  100  Atl.  329;  PeekskUl,  etc.,  R.  Co.  v.  Peekskill,  21  App.  Div.  94, 
165  N.  Y.  628,  59  N.  E.  1128;  Malone  v.  Philadelphia,  147  Pa.  St.  416, 
23  Atl.  628;  Davis  v.  U.  S.,  17  Ct.  CI.  201,  215;  Phcsnix  I.  Co.  v.  U.  S., 
39  Ct.  CI.  526;  Maryland  Dredging  Co.  v.  U.  S.,  241  U.  S.  184,  60  L.  Ed.  945, 
aff'g  49  Ct.  CI.  710;  U.  S.  v.  U.  S.  Bethlehem  S.  Co.,  205  U.  S.  105,  51  L.  Ed. 
731. 

'  Salem  v.  Anson,  40  Oreg.  339,  67  Pac.  190,  56  L.  R.  A.  169;  Davis  v.  U.  S., 
17  Ct.  CL  201;  Haliday  v.  U.  S.,  33  Ct.  CI.  453;  Edgar  v.  U.  S.,  34  Ct.  CI.  205; 
Smith  Co.  V.  U.  S.,  34  Ct.  CI.  472. 

*  Davin  v.  Syracuse,  69  Misc.  285,  145  N.  Y.  App.  Div.  904;  Cleveland  v. 
Connelly,  33  Ohio  Cir.  Ct.  64;  Davis  v.  U.  S.,  17  Ct.  CI.  201. 

5  Smith  V.  Copiah  County,  239  Fed.  425,  aff'd  239  Fed.  432;  McCann  v. 
Albany,  11  N.  Y.  App.  Div.  378,  158  N.  Y.  634,  53  N.  E.  673. 

494 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  358 

breach  are  wholly  uncertain  and  cannot  be  ascertained.^ 
It  has  been  said,  however,  that  it  is  neither  excessive  nor 
exorbitant  to  fix  twenty  five  dollars  per  day  as  damages  for 
failure  to  deliver  scows  costmg  under  the  contract  in  excess 
of  ten  thousand  dollars.^ 

§  358.  Bond  Given  to  Promote  a  Public  Interest. 

It  often-time  happens   that  where  franchises  are  con- 
ferred by  a  municipal  corporation  or  by  the  government 
itself,  a  bond  is  required  to  secure  the  construction  of  the 
public  work  which  is  to  be  operated  in  exercise  of  the 
franchise.     The  condition  of  the  bond  generally  is  that  if 
the  construction  is  not  fulfilled  by  a  stated  date,  the  bond 
is  declared  forfeited,  although  no  pecuniary  damages  may 
be  shown  to  be  sustained  by  the  government  or  its  sub- 
divisions.    A  distinction  is  made  in  these  cases  between 
private  obligations  and  bonds  given  to  the  sovereign  or  its 
agent  for  the  purpose  of  promotmg  a  public  mterest  or 
policy.    In  the  latter  instance  there  would  be  no  intention 
to  indenmify  for  the  reason  that  the  state  can  gain  nothing 
in  its  political  or  sovereign  character  by  the  performance  of 
the  condition  of  the  bond,  or  lose  anything  by  default.    If 
a  municipality  or  the  state  or  nation  requires  as  a  condi- 
tion of  the  making  of  a  contract  for  sale  of  franchises,  the 
payment  of  a  fixed  sum  in  liquidated  damages,  the  sum 
becomes  forfeited  in  case  the  utility  is  not  constructed  and 
put  into  operation  by  the  time  limited  in  the  contract. 
The  reason    for  this    rule  is  that    the    obhgors    become 
bound  because  of  a  penalty  or  forfeiture  inflicted  by  the 
sovereign  power  for  breach  of  its  laws.     Security  is  taken 

1  Willson  V.  Baltimore,  supra;  New  Britain  v.  New  Britain  Telephone  Co., 
74  Conn.  326,  50  Atl.  881,  1015. 

2  EUicott  Machine  Co.  v.  U.  S.,  43  Ct.  CI.  232. 

495 


§  359  ]  PERFORMANCE   AND   BREACH  [  PART  V 

before   the   offense   is   committed   and    retained   upon   its 
commission.^ 

§  359.  When  Provision  Will  not  be  Considered  a  Penalty — 
Deposit  Money. 
Where  in  order  to  enter  into  a  contract  or  make  a  pro- 
posal the  pubUc  body  requires  a  deposit  to  accompany 
the  proposal  for  the  performance  of  the  proposal,  and  pro- 
\'ides  that  in  case  the  bidder  fails  to  execute  a  contract 
the  deposit  shall  be  retained  by  the  public  body,  this  is 
usually  considered  as  an  intention  to  liquidate  damages 
and  the  deposit  will  be  so  considered.^  If  a  public  body 
suffers  no  loss  from  the  failure  of  the  prospective  con- 
tractor to  carry  out  his  bid,  the  public  body  will  be  re- 
quired to  repay  the  deposit  even  though  the  bidder's 
stipulation  was  that  it  should  be  retained  as  liquidated 
damages.^  Where  it  appears  from  the  surrounding  circum- 
stances that  the  deposit  is  in  the  nature  of  a  penalty  it 
may  be  enforced  only  to  the  extent  of  actual  loss  suffered 
by  the  public  body  from  failure  to  enter  into  the  contract.^ 
When  no  loss  is  suffered  by  the  public  body  or  a  loss  less 
than  the  amount  of  the  deposit,  the  whole  amount  of  the 
deposit  or  such  balance  as  the  contractor  is  entitled  to, 

>  Clark  V.  Barnard,  108  U.  S.  436,  27  L.  Ed.  780;  U.  S.  v.  Montell,  26  Fed, 
Cases  No.  15798;  Nilson  v.  Jonesboro,  57  Ark.  168,  20  S.  W.  1093;  Brooks  v. 
Wichita,  114  Fed.  297;  Fiscal  Ct.  v.  Ky.  Public  Service  Co.,  204  S.  W.  (Ky.) 
77;  Salem  v.  Anson,  40  Oreg.,  339, 67  Pac.  190,  56  L.  R.  A.  169;  Peekskill,  etc., 
R.  Co.  V.  Peekskill,  21  N.  Y.  App.  Div.  94,  165  N.  Y.  628,  59  N.  E.  1128; 
Grants  Pass  v.  Rogue  River  Pub.  Serv.  Corp.,  87  Oreg.  637,  171  Pac.  400; 
York  V.  York  Rys.  Co.,  229  Pa.  St.  236,  78  Atl.  128. 

2  Wheaton  Bldg.  &  L.  Co.  v.  Boston,  204  Mass.  218,  90  N.  E.  598;  Coonan 
V.  Cape  Girardeau,  149  Mo.  App.  609,  129  S.  W.  745;  Davin  v.  Syracuse,  69 
Misc.  285,  145  N.  Y.  App.  Div.  904;  Hattersly  v.  Waterville,  16  Ohio  Cir.  Ct. 
226;  Turner  v.  Fremont,  159  Fed.  221;  Morgan  Park  v.  Gahan,  136  111.  515,  26 
N.  E.   1085. 

3  Graham  v.  Lebanon,  240  Pa.  St.  337,  87  Atl.  567. 
*  WilLson  V.  Baltimore,  83  Md.  203,  34  Atl.  774. 

496 


CHAP.  XL  ]  LIQUIDATED   DAMAGES  [  §  360 

may  be  recovered.^  But  the  fact  that  a  city  relets  a  con- 
tract to  another  bidder  without  re-advertising,  will  not 
have  the  effect  of  entitling  the  bidder  to  the  return  of  his 
deposit  where  he  fails  to  enter  into  the  contract.-  A  check 
deposited  for  a  stated  purpose  that  it  shall  be  as  a  surety 
for  the  making  and  execution  of  a  contract,  cannot  be 
treated  as  liquidated  damages.  It  is  rather  in  the  nature 
of  an  obligation  to  reimburse  or  compensate  the  actual  loss 
resulting  from  a  default.^ 

§  360.  Provisions  for  Payment  in  Event  of  Delay. 

Where  a  public  contractor  fails  to  complete  his  work  on 
time  under  a  contract  which  contains  a  provision  for  the 
payment  of  certain  moneys  in  the  event  of  his  failure  to 
perform  on  time,  such  provision,  if  reasonable,  is  looked 
upon  usually  as  one  for  liquidated  damages  and  not  as  a 
penalty.''  The  reason  for  such  rule  is  based  upon  the  un- 
certainty of  estimating  the  damages  which  a  public  body 
would  suffer  from  such  delay.  ^  The  rule  is  especially 
adaptable  to  contracts  for  the  construction  of  large  public 
works,  where  the  reason  for  the  rule  appropriately  applies.^ 

1  Lindsey  v.  RockwaU  County,  10  Tex.  C.  A.  225,  30  S.  W.  380;  Graham  v. 
Lebanon,  supra. 

2  Turner  v.  Fremont,  supra. 

3  Barber  Asphalt  Paving  Co.  v.  St.  Paul,  136  Minn.  396,  162  N.  W.  470, 
L.  R.  A.  1917  E.  370. 

4  Lincohi  v.  Little  Rock  Granite  Co.,  56  Ark.  405, 19  S.  W.  1056;  Mayor,  etc., 
of  Jersey  City  v.  Flynn,  74  N.  J.  Eq.,  104,  70  Atl.  497;  Macey  Co.  v.  New 
York,  144  N.  Y.  App.  Div.  408,  208  N.  Y.  514,  101  N.  E.  1110;  Malone  v. 
Philadelphia,  147  Pa.  St.  416,  23  Atl.  628. 

5  Malone  v.  Philadelphia,  supra;  Heard  v.  Dooly  County,  101  Ga.  619,  28 
S.  E.  986. 

«  Lawrence  County  v.  Stewart,  72  Ark.  525,  81  S.  W.  1059;  Heard  v.  Dooly 
County,  sujyra;  Winston  v.  Pittsfield,  221  Mass.  356,  108  N.  E.  1038;  Thomp- 
son V.  St.  Charles  County,  227  Mo.  220,  126  S.  W.  1044;  McClintic-Marshal 
Con.  Co.  V.  Hudson  County,  83  N.  J.  Eq.  539,  91  Atl.  881;  Malone  v.  Phila- 
delphia, supra;  Stephens  v.  Essex  Co.  Pk.  Comm.,  143  Fed.  844;  Morris  v. 
U.  S.  50  Ct.  CI.  154;  Link  Belt  Eng.  Co.  v.  U.  S.,  142  Fed.  243;  Motschman  v. 
U.  S.,  47  Ct.  CI.  373;  Baltimore  v.  Ault,  126  Md.  402,  94  Atl.  1044;  Whiting 
V.  New  Baltimore,  127  Mich.  66,  86  N.  W.  403. 

497 


§  360  ]         PERFORMANCE  AND  BREACH        [  PART  V 

Municipal,  state  and  national  contracts  usually  provide 
that  a  stated  sum  for  each  day's  delay  shall  be  paid  by  the 
contractor  to  the  public  body.  Where  the  amount  to  be 
retained  by  the  public  body  is  out  of  all  proportion  to  the 
damage/  or  where  the  intention  of  the  parties  and  the 
surrounding  circumstances  indicate  a  different  character  to 
the  stipulation,  it  will  not  be  regarded  as  one  for  liquidated 
damages,  but  rather  as  a  penalty.^  When  the  actual  loss 
and  damage  can  be  shown  the  provision  will  be  treated  as 
a  penalty.^  In  like  manner  if  the  contract  provides  that 
in  case  of  annulment  the  retained  percentages  are  to  be 
treated  as  forfeited,  such  a  clause  will  be  regarded  as  im- 
posing a  penalty.''  But  these  provisions  for  forfeiture  of 
certam  amounts  in  case  of  delay,  do  not  apply  to  delays 
for  which  the  contractor  has  an  excuse,  as  where  the 
delay  was  caused  by  the  public  body.^  No  forfeiture 
of  the  amount  stipulated  as  liquidated  damages  can  be 
effected,  where  a  public  work  contracted  for  is  not  com- 
pleted in  time,  if  the  warrants  drawn  on  the  state  treas- 
urer and  deUvered  to  the  contractor,  are  not  paid  and 
his  real  reason  for  delay  is  that  he  cannot  proceed  be- 
cause of  lack  of  funds  with  which  to  pay  labor  and  pur- 
chase materials.^  If  the  initial  delay  was  caused  by  the 
Government  it  cannot  recover  liquidated  damages  where 
the  work  was  later  completed,  but  there  was  also  some 
delay  by  the  contractor.^    This  is  true,  although  the  con- 

1  Moore  v.  Platte  County,  8  Mo.  467. 

2  McCann  v.  Albany,  11  N.  Y.  App.  Div.  378,  158  N.  Y.  634,  53  N.  E. 
673. 

» Smith  Co.  V.  U.  S.,  34  Ct.  CI.  472. 

*  Satterlee  v.  U.  S.,  30  Ct.  CI.  31. 

6  U.  S.  V.  United  Eng.,  etc.,  Co.,  234  U.  S.  236,  58  L.  Ed.  1294,  aff'g  47  Ct. 
CI.  489;  Morris  v.  U.  S.,  50  Ct.  CI.  154. 

« Landry  v.  Peytavin,  7  Mart.  (La.)  165. 

'  U.  S.  V.  United  Eng.,  etc.,  Co.,  234  U.  S.  236,  58  L.  Ed.  1294,  aflf'g  47  Ct. 
CI.  489;  Ittner  v.  U.  S.,  43  Ct.  CI.  336. 

498 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  360 

tractor  unreasonably  delays  his  completion,  if  prior  to  such 
delay  the  conduct  of  the  Government  prevented,  by  its 
delay,  a  strict  performance.^  In  such  a  situation,  the 
stipulation  for  damages  is  not  revived  against  the  con- 
tractor. ^  Where  both  parties  are  in  fault,  the  same  rule 
applies, — the  stipulation  for  liquidated  damages  is  no  longer 
binding.'  But  the  courts  will  undertake  to  apportion  the 
damage  where  the  contract  provides  that  it  shall  be  appor- 
tioned and  impose  damages  on  the  contractor  for  such 
delays  as  are  chargeable  to  him.^  These  stipulations  do 
not  apply  where  a  contractor  completely  abandons  the 
work,  but  only  in  cases  where  he  finishes  it.^  When  the 
public  body  completes  the  work  it  may  not  claim  the 
amount  stipulated  in  the  contract  as  liquidated  damages.® 
Where  the  delay  is  occasioned  by  extra  work,  if  there  is  no 
provision  in  the  contract  to  cover  this  class  of  work  and 
hold  the  contractor  to  finish  all  of  his  work,  including  the 
extra  work,  within  the  time  limited  by  the  contract,  a 
direction  by  the  public  body  to  perform  extra  work  will 
operate  to  make  the  clause  for  stipulated  damages  inap- 
plicable.^ The  general  rule  seems  to  be  that  where  the 
parties  are  mutually  responsible  for  the  delay,  by  reason 
of  which  the  date  limited  by  the  contract  for  its  comple- 
tion has  passed,  the  obligation  of  the  stipulation  relating  to 
liquidated  damages  is  destroyed  and  unless  the  contract 

^Idem. 

2  U.  S.  V.  United  Eng.,  etc.,  Co.,  supra;  Ittner  v.  U.  S.,  43  Ct.  CI.  336;  Dist. 
of  Col.  V.  Camden  Iron  Works,  15  App.  D.  C.  198. 

3  U.  S.  V.  United  Eng.,  etc.,  Co.,  supra;  Gustavino  Co.  v.  U.  S.,  50  Ct.  CI.  115. 
« Schmulbach  v.  Caldwell,  196  Fed.  16;  Van  Buskirk  v.  Passaic  Bd.  of  Ed., 

78  N.  J.  L.  650,  75  Atl.  909. 

5  Moore  v.  Bd.  of  Regents,  215  Mo.  705,  115  S.  W.  6;  Clarke  &  Sons  v. 
Pittsburgh,  146  Fed.  441,  154  Fed.  464;  Gallagher  v.  Baird,  54  N.  Y.  App. 
Div.  398,  170  N.  Y.  566,  62  N.  E.  1095. 

« Moore  v.  Dis.,  etc.,  Bd.  of  Regents,  215  Mo.  705,  115  S.  W.  6. 

^  Gammino  v.  Dedham,  164  Fed.  593. 

499 


§  360  ]         PERFORMANCE  AND  BREACH        [  PART  V 

provides  in  some  manner  for  the  substitution  of  another 
date,  the  stipulation  cannot  be  revived  and  is  not  effective 
under  the  contract.^ 

§  361.  The  Measure  Provided  by  the  Contract  Controls. 

Where  the  parties  to  a  public  contract  provide  by  its 
terms  a  measure  of  damages,  to  be  effective  in  the  event  of 
its  breach,  the  agreement  of  the  parties  in  this  respect  will 
ordinarily  be  enforced. ^  When  the  contract  contemplates 
the  likehhood  of  its  cancellation  and  the  power  to  cancel 
is  reserv^ed  and  an  indemnity  agreed  upon  as  the  amount 
to  be  paid  for  cancelling  the  contract,  this  will  be  taken 
by  the  courts  as  a  measure  of  damages  for  illegally  refusing 
to  award  the  contract.^  It  is  never  necessary  to  give  proof 
of  actual  damages  in  order  to  recover  the  amount  fixed  by 
the  agreement  as  liquidated  damages."*  It  will  be  presumed 
that  some  damages  are  suffered  in  a  case  where  the  clause 
of  the  contract  providing  for  liquidated  damages  has 
appropriate  application.^  The  amount  fixed  will  not  be 
increased  by  adding  interest.^ 

§362.  Waiver. 

Whenever  the  parties  to  a  contract  provide  time  to  be  of 
the  essence  and  stipulate  for  damages  in  the  event  that 
the  contract  is  not  completed  in  time,  this  provision  may 
be  waived,  and  an  extension  of  the  time  to  complete  the 
contract  will  operate  to  waive  the  stipulation  relatmg  to 

1  Mosler  Safe  Co.  v.  Maiden  Lane  S.  D.  Co.,  199  N.  Y.  499,  93  N.  E.  81. 

2  Dennis  v.  U.  S.,  5  Ariz.  313;  Chicago  v.  Sexton,  115  111.  230,  2  N.  E.  263. 
2  Garfielde  v.  U.  S.,  93  U.  S.  242,  23  L.  Ed.  779. 

*  Salem  i^.  Anson,  40Oreg.  339,  67  Pac.  190,  56  L.  R.  A.  169;  U.  S.  v.  Diecker- 
hoff,  202  U.  S.  302,  50  L.  Ed.  1041;  Ellicott  Machine  Co.  v.  U.  S.,  43  Ct.  CI. 
232. 

'  Davin  v.  Syracuse,  69  Misc.  285,  145  N.  Y.  App.  Div.  904. 

» Kinser  Const.  Co.  v.  State,  125  N.  Y.  Supp.  46. 

500 


CHAP.  XLIX  ]  LIQUIDATED   DAMAGES  [  §  363 

damages.  By  being  waived  it  becomes  eliminated  from 
the  contract  and  no  longer  entitles  the  party  in  whose 
favor  it  is  written  to  recover  liquidated  damages.^  The 
clause  will  not  be  revived  even  to  cover  an  unreasonable 
delay.  When  a  contractor  agrees  to  do  a  piece  of  work 
within  a  given  time  and  the  parties  have  stipulated  a  fixed 
sum,  it  is  not  disproportionate  as  liquidated  damages.  The 
other  party,  to  enforce  such  payment,  cannot  prevent  the 
performance  of  the  contract  within  the  stipulated  time.  If 
he  does,  even  though  there  was  further  delay  by  the  fault 
of  the  contractor,  the  rule  of  the  original  contract  relating 
to  liquidated  damages  becomes  waived  and  annulled.^ 
Once  waived  the  clause  cannot  be  revived  in  the  absence  of 
express  provision  of  the  contract.^ 

§  363.  Relief  in  Equity  from  Clause. 

Where  a  provision  in  a  contract  provides  for  liquidated 
damages  and  there  is  real  and  substantial  damage  suffered 
and  its  admeasurement  is  so  difficult  that  an  agreed  sum 
is  not  only  fair  but  practically  necessary,  equity  will  leave 
the  parties  to  their  legal  rights  and  will  not  grant  relief 
against  such  a  clause  unless  the  amount  fixed  is  so  dispro- 
portionate to  actual  damages  as  to  be  unconscionable  and 
to  justify  a  finding  that  the  formal  agreement  as  to  dam- 
ages was  a  mere  pretense  to  annul  the  doctrine  of  equitable 
relief.* 

1  Maryland  Steel  Co.  v.  U.  S.,  235  U.  S.  451,  59  L.  Ed.  312;  Stroebel  Steel 
Co.  V.  Chicago  San.  Dist.,  160  111.  App.  554. 

2  U.  S.  V.  United  Eng.,  etc.,  Co.,  234  U.  S.  236,  58  L.  Ed.  1294,  aff'g  47  Ct. 
CI.  489. 

'  U.  S.  V.  United  Eng.,  etc.,  Co.,  supra;  Maryland  Steel  Co.  v.  U.  S.  supra; 
Dist.  of  Col.  V.  Harlan,  etc.,  Co.,  30  App.  D.  C.  270;  Camden  I.  Wks.  v.  New 
Orleans  Sew.  Bd.,  141  La.  453,  75  So.  204;  Wight  v.  Chicago,  137  lU.  App. 
240,  234  111.  83,  84  N.  E.  628. 

*  U.  S.  V.  Rubin,  227  Fed.  938. 

501 


CHAPTER  L 

LIMITATIONS  TO  SUITS  ON  PUBLIC  CONTRACTS 

§  364.  Liability  of  Government  and  its  Sub-Divisions  to 
Suit. 

The  United  States  has  power  to  make  contracts^  and 
may  be  liable  in  many  ways  on  impHed  contracts.  ^  The 
power  to  make  contracts  is  an  incident  to  sovereignty,  in 
order  to  accomplish  the  objects  of  government.^  When 
the  nation  or  the  state  thus  enters  into  a  contract  it  lays 
aside  its  robe  as  sovereign  and  becomes  bound  by  the  same 
obligations  as  an  individual  and  its  contracts  are  governed 
by  the  same  laws.^ 

But  while  the  nation  and  the  state  may  thus  make  con- 
tracts, neither  can  be  sued  ^  without  consent  on  its  part. 
And  even  after  it  has  agreed  that  it  may  be  sued  the 
sovereign  may  defeat  suit  by  failing  to  make  an  appropria- 
tion to  pay  the  contract  debt.^  Where  a  municipality  has 
power  to  make  contracts,  hold  property  and  exercise  the 

1  U.  S.  V.  Rubin,  227  Fed.  938. 

2  U.  S.  V.  RusseU,  16  WaU.,  80  U.  S.  623,  20  L.  Ed.  474,  aff'g  5  Ct.  CI.  121; 
V.  S.  V.  Great  Falla  Mfg.  Co.,  112  U.  S.  645,  28  L.  Ed.  846,  aflf'g  16  Ct.  CI.  160; 
Dooley  v.  U.  S.,  182 U.  S.  222,  45  L.  Ed.  1074;  U.  S.  v.  Lynah,  188  U.  S.  445, 
47  L.  Ed.  539. 

»  Dugan  V.  U.  S.,  3  Wheat,  (U.  S.)  172,  4  L.  Ed.  362;  Van  BrockUr.  v.  Tennes- 
see, 117  U.  S.  151,  29  L.  Ed.  845;  Moses  v.  U.  S.,  166  U.  S.  571,  41  L.  Ed.  1119, 
aff'g  3  App.  D.  C.  277;  Dickson  v.  U.  S.,  125  Mass.  311. 

*  Ohio  Life  Ins.,  etc.,  Co.  v.  Debolt,  16  How.  (U.  S.)  416,  14  L.  Ed.  997; 
Davenport  v.  Bufiington,  97  Fed.  234;  Patton  v.  Gihner,  42  Ala.  548,  94  Am. 
Dec.  665;  Chapman  v.  State,  104  Cal.  690,  38  Pac.  457;  Carr  v.  State,  127 
Ind.  204,  26  N.  E.  778;  Indiana  v.  Woram,  6  Hill  33,  40  Am.  Dec.  378;  People 
ex  rd.  Graves  v.  Sohmer,  207  N.  Y.  450,  101  N.  E.  164;  Cleveland  Term'l, 
etc.,  R.  Co.  V.  State,  85  Ohio  St.  251,  97  N.  E.  967. 

^  County  of  Albany  v.  Hooker,  204  N.  Y.  1,  97  N.  E.  403;  Cayuga  Co.  v. 
State,  183  N.  Y.  Supp.  646. 

« Can-  V.  State,  127  Ind.  204,  26  N.  E.  778. 

502 


CHAP.  L  ]  LIMITATIONS    TO  SUITS  [  §  366 

power  to  tax,  there  arises  in  its  favor  the  right  to  sue  and 
against  it  the  right  to  be  sued.^  Mere  territorial  subdivi- 
sions or  boards  which  do  not  constitute  a  municipal  cor- 
poration proper  can  neither  be  sued  nor  sue,  unless  the 
legislature  expressly  permits  it.^ 

§  365.  Venue  of  Actions. 

Actions  against  a  municipal  corporation  must  be  brought 
in  the  county  where  it  is  situated  ^  and  if  it  is  located  in 
several  counties,  its  principal  office  or  place  of  business  is 
in  the  county  where  its  principal  seat  of  government  is 
located.^  In  New  York  certain  municipal  corporations  are 
domestic  corporations  and  are  accordingly  controlled  by 
the  general  corporation  law  which  fixes  the  venue  of  suits 
against  domestic  corporations.^  It  is  implied  in  New  York 
that  the  legislature  has  conferred  upon  every  city  in  that 
state  the  attribute  of  residence  in  that  county  in  which  its 
principal  place  of  business  is  located,  so  far  as  residence 
controls  the  jurisdiction  of  county  courts.^ 

§  366.  Condition  Precedent  to  Suit — Necessity  to  Present 
Notice  of  Claim. 
The  legislature  possesses  power  to  enact  statutes  impos- 
ing as  a  condition  precedent  to  suit  the  filing  of  a  notice  of 
claim  with  the  common  council,   financial,   law  or  other 

1  McCloud  V.  Selby,  10  Conn.  390,  27  Am.  Dec.  689;  Anne  Arundel  Co.  v. 
Duckett,  20  Md.  468,  83  Am.  Dec.  557. 

2  Hunsaker  v.  Borden,  5  Cal.  288,  63  Am.  Dec.  130. 

3  St.  Louis  V.  Wiggins  Ferry  Co.,  11  Wall.  (U.  S.)  423,  429,  20  L.  Ed.  192; 
Phillips  V.  Baltimore,  110  Md.  431,  72  Atl.  902;  Piercey  v.  Johnson  City,  130 
Tenn.  231,  169  S.  W.  765,  L.  R.  A.  1915  F.  1029;  Marshall  v.  Kansas  City, 
95  Kan.  548,  148  Pac.  637;  L.  R.  A.  1915  F.  1025. 

« Maisch  v.  New  York,  193  N.  Y.  460,  86  N.  E.  458;  Fostoria  v.  Fox,  60 
Ohio  St.  340,  54  N.  E.  370;  Arlington  v.  Calhoun,  148  Ga.  132,  95  S.  E.  991' 

*  Maisch  v.  New  York,  supra;  Eldred  v.  New  York,  159  N.  Y.  App.  Div. 
301. 

•  Maisch  v.  New  York,  Bupra. 

503 


§  366  ]  PERFORMANCE   AND   BREACH  [  PART  V 

officer  of  the  city,  and  providing  that  no  action  may  be 
maintained  against  the  municipahty  until  the  claimant  shall 
so  present  written  notice  of  his  claim  containing  a  state- 
ment and  the  amount  thereof  duly  verified,  and  it  may 
prescribe  a  limit  of  time  within  which  such  claim  may  be 
presented.^  Statutes  of  this  sort  passed  by  the  legislature 
will  be  upheld,  notwithstanding  that  such  requirements 
did  not  exist  at  common  law,  as  long  as  they  are  not  un- 
reasonable. They  fall  naturally  into  two  classes  depending 
upon  the  language  and  intent  thereof  as  shown  by  the 
statute.  One  class  is  a  statutory  condition  of  the  right, 
which  imposes  a  condition  of  the  very  existence  of  the 
right  and  so  is  a  condition  precedent  to  any  suit  being 
maintained  at  all  upon  the  contract.  The  other  class 
creates  a  statute  of  limitations  which  acts  on  the  remedy 
only  and  to  be  availed  of  must  be  pleaded  and  taken  ad- 
vantage of  by  demurrer  or  answer  and  if  not  so  taken  it 
may  be  waived.  In  this  latter  case  the  right  of  suit  on  the 
contract  is  independent  of  the  statute.  The  enforcement 
of  the  right  is  regulated  and  limited.  In  the  former  class, 
the  failure  to  give  the  notice  and  comply  with  the  statute 
prevents  the  right  of  action  from  springing  into  being  and 
failure  to  comply  with  the  condition  need  not  be  pleaded 
and  cannot  be  waived.  Many  of  the  statutes  go  to  the 
extent  of  requiring  the  claimant  to  plead  and  prove  the 
giving  of  the  notice  as  part  of  his  cause  of  action.^    Where 

1  O'Connor  v.  Fond  DuLac,  109  Wis.  253,  53  L.  R.  A.  831;  Cunningham 
V  Denver,  23  Colo.  18,  45  Pac.  356;  Ada  Co.  v.  BuUen  Br.  Co.,  5  Idaho,  188 
47  Pac.  818,  36  L.  R.  A.  372;  Miller  v.  Mullan,  17  Idaho  28,  104  Pac.  660, 
32  L.  R.  A.  N.  s.  350;  Schigley  v.  Waseca,  106  Minn.  94,  118  N.  W.  259,  19 
L  R.  A.  N  s.  689;  Frasch  v.  New  Ulm,  130  Minn.  41,  153.  N.  W.  121,  L.  R.  A. 
1915  E.  749;  MacMullen  v.  Middletown,  187  N.  Y.  37,  79  N.  E.  863;  11  L.  R.  A. 
N.s.  391;  Winter  v.  Niagara  Falls,  190  N.  Y.  198,  82  N.  E.  1101;  Cole  v. 
Seattle  64  Wash.  1,  34  L.  R.  A.  n.  s.  1166;  Hase  v.  Seattle,  51  Wash.  174,  98 
Pac  370;  Collins  v.  Spokane,  64  Wash.  153,  116  Pac.  663,  35  L.  R.  A.  N.  8  840. 

2  Winter  v.  Niagara  Falls,  190  N.  Y.  198,  82  N.  E.  1101. 

504 


CHAP.  L  ]  LIMITATIONS  TO   SUITS  [  §  367 

the  statute  requires  that  claimant  shall  present  his  claim 
within  a  stated  period  and  he  fails  to  do  so,  this  operates 
under  some  statutes  to  extinguish  the  claim.  ^  These 
statutes  being  derogatory  of  the  common  law  are  strictly- 
construed  and  not  extended  beyond  their  fair  purport  or  so 
as  to  include  other  cases  than  those  expressed.  Conform- 
able to  such  principle  the  ''claim"  or  ''demand"  of  which 
a  notice  must  be  filed  does  not  include  a  tort.^  And  it  has 
also  been  determined  that  these  statutes  only  apply  to 
actions  brought  in  the  State  Courts  and  have  no  applica- 
tion where  suit  is  laid  in  the  Federal  Courts.^  But  a  per- 
son having  a  claim  against  a  county  has  the  option  of  pre- 
senting it  for  audit  or  of  suing  upon  it  directly."*  The 
presentation  of  an  itemized,  verified  bill  for  audit,  thirty 
days  before  action  brought,  is  a  condition  precedent  to  the 
right  to  sue,  and  must  be  pleaded  to  be  available.  The 
failure  of  the  public  body  to  return  an  unverified  state- 
ment of  account,  or  to  make  objection  on  that  ground  is 
not  a  waiver  of  the  defect.^ 

§  367.  Effect  of  Allowance  or  Rejection  of  Claim. 

Municipalities,  in  passing  on  these  claims  thus  presented 
to  them  under  statutes  referred  to,  act  in  a  merely  execu- 
tive capacity  and  the  allowance  of  the  claim  is  not  con- 
clusive, as  it  would  be  if  the  board  acted  in  a  judicial 
capacity.  Accordingly  municipalities  are  not  estopped  by 
the  allowance  of  the  clauu  but,  like  every  similar  act  of  an 
individual  or  corporation,  it  is  to  be  taken  as  an  admission, 

1  Hay  V.  Baraboo,  127  Wis.  1,  105  N.  W.  654,  3  L.  R.  A.  n.  s.  84. 

2  Shields  v.  Durham,  118  N.  C.  450,  24  S.  E.  794,  36  L.  R.  A.  293;  McGaffin 
V.  Cohoes,  74  N.  Y.  387,  30  Am.  R.  307. 

3  Gamewell  Fire  Alarm  Co.  v.  Mayor,  31  Fed.  312. 

*  N.  Y.  Cath.  Protectory  v.  Rockland  Co.,  212  N.  Y.  311,  106  N.  E.  80; 
Delano  v.  Suffolk  Co.,  192  N.  Y.  App.  Div.  459,  229  N.  Y.  610,  129  N.  E.  928. 

^Comm.  Water  Co.  v.  Castleton,  192  N.  Y.  App.  Div.  697;  Cotrisa  v. 
Medina,  139  N.  Y.  App.  Div.  872,  206  N.  Y.  713,  99  N.  E.  1105. 

505 


§  367  ]  PERFOR>L\NCE  AND   BREACH  [  PART  V 

which  however  is  rebuttable;  and  it  can  later  be  shown 
that  the  allowance  was  made  without  a  full  knowledge  of 
all  the  circumstances  or  that  it  was  incorrectly  or  im- 
prudently allowed.^  If  the  board  charged  with  the  duty 
of  passing  on  the  claim,  allows  a  claim  which  is  illegal  or 
one  which  a  court  will  not  enforce,  such  action  can  have  no 
effect.  The  governing  body  or  other  board  of  a  municipal- 
ity have  no  power  or  ability  to  give  validity  to  a  claim 
which  it  otherwise  did  not  possess.^  Where  a  claim  is  once 
passed  on  it  cannot  be  reconsidered.^ 

§  368.  Rights  and  Remedies  Available  to  Public  Bodies. 

Pubhc  bodies  may,  for  the  purpose  of  protecting  their 
property,  and  in  general  in  the  transaction  of  business 
of  a  private  character,  avail  themselves  of  all  the  rights 
and  remedies  afforded  to  an  individual."  Where  a  con- 
tract specifically  provides  for  the  consequences  of  its 
breach  the  remedy  thus  provided  is  exclusive.^  The 
usual  measure  of  damages  is  compensation  which  will 
make  the  hurt  party  whole,  as  nearly  as  is  possible,  and 
this  rule  applies  alike  to  public  and  private  contracts.* 
But  the  contractor  is  not  limited  to  suit  upon  the  contract 
since  he  may  also  sue  on  assimapsit  for  the  amount  due 
under  the  contract.^ 

'HuntingtonCountyv.Heaston,  144Ind.583,41N.E.  457;  Jackson  County 
V.  Nichols,  12  Ind.  App.  315,  40  N.  E.  277;  Clark  v.  Des  Moines,  19  Iowa, 
199,  87  Am.  Dec.  423;  State  v.  Minden,  84  Neb.  193,  120  N.  W.  913;  People 
V.  Buffalo,  140  N.  Y.  300,  35  N.  E.  485. 

2  Berka  v.  Woodward,  125  Cal.  119,  57  Pac.  777;  Huntington  Co.  v.  Heaston, 
sujrra. 

»  McConaughey  v.  Jackson,  101  Cal.  265,  35  Pac.  863,  40  Am.  St.  Rep.  53; 
Re  Equit.  T.  Co.  v.  Hamilton,  226  N.  Y.  241,  123  N.  E.  380. 

*  Buffalo  V.  Bettinger,  76  N.  Y.  393;  Buffalo  Cement  Co.  v..  McNaughton, 
90  Hun,  74,  156  N.  Y.  702,  51  N.  E.  1089. 

'  Mechanic's  Bank  v.  New  York,  164  N.  Y.  App.  Div.  128. 

•  Newport  v.  Newport  L.  Co.,  17  Ky.  L.  R.  31,  30  S.  W.  606. 

7  Bigclow  V.  Perth  Amboy,  25  N.  J.  L.  297;  Charlotte  v.  Atlantic  Bitulithic 
Co.,  228  Fed.  456. 

506 


INDEX 


INDEX 

[References  are  to  aectionsj 

ABANDONMENT— ANTICIPATORY  BREACH.     See  also  Renun- 
ciation 

when  justified,  308 
ABANDONMENT 

public  body  may  abandon  on  making  compensation,  299 

public  may  refuse  to  allow  contractor  to  proceed,  299 

when  letting  of  new  contract  enjoined,  299 

threat  of,  will  not  justify  expelling  contractor,  299 
ACCEPTANCE  OF  BID.    See  Lowest  Bidder;  Letting  to 
ACCEPTANCE  OF  PERFORMANCE 

if  contract  not  completed  in  time  or  properly  performed,  acceptance 
binds,  300 

is  not  waiver  of  outstanding  right  of  action,  300 

use  and  occupancy  of  structure,  not,  300 

making  repairs  is  not,  300 

performance  not  waived  by  taking  possession  of  defective  structure 
and  payment,  effect,  if  latent  defects  thereafter  discovered,  300 

by  officers,  as  work  progresses,  is  binding,  300 

binds  property  owner  locally  assessed,  300 

waiver  of  strict  compliance,  by,  301 
ACTION  AND  LIABILITY.    See  Public  Officers;  Suits;  Venue 
ADVERTISEMENT.    See  Bids;  Lowest  Bidder,  Letting  to;  Letting 

OF  Public  Contracts 
AGENTS.    See  Pubuc  Officers 
AGREEMENT 

to  do  a  certain  thing,  effect  of,  188 
AGREEMENTS— INSTRUMENTS  ANNEXED  OR  REFERRED  TO 

interpreted  as  part  of,  189 

reference  for  limited  purpose  only,  effect  of,  189 

variance  of  contract  and  specifications,  189 

reference  to  prior  abandoned  contract,  effect  of,  190 
AGREEMENTS— SEVERAL  FORMING  CONTRACT 

executed  about  same  time,  construed  together,  186 

when  connected  by  reference  for  limited  purposes,  186,  189 

if  written  contract  makes  specifications  part,  will  be  considered  sup- 
plemental, 186 

specific  date  for  work,  not  controlled  by  general  statement  fixing 
different  time,  186 

509 


INDEX 

[References  are  to  sections] 

AGREEMENTS— Con^inwed 

where  contract  made  part  of  sub-contract,  effect  of,  186 

letter  attached  modifies,  186 

several  statutes  constituting  contract,  187 
AID  TO  PRIVATE  ENTERPRISE.    See  Private  Enterprise 
ALTERATIONS.    See  Reserved  Right  to  Make;  Modification 
AMBIGUITY 

aids  to  interpretation  have  no  place  unless,  170,  171 

each  provision  may  be  clear,  but  whole  doubtful,  171 

if  latent,  parol  proof  admissible  to  explain,  171 

forfeitures  not  enforced  if  ambiguous,  171 
ANNULMENT,  313,  314,  315.    See  also  Breach;  Reserved  Right  to 

Annul 
ANTICIPATORY  BREACH.    See  Renunciation 
APPROPRIATION— NECESSITY  FOR 

provision  mandatory,  5,  146 

contract  made  without,  effect  of,  5,  146 

if  fund  existed,  effect  of  subsequent  exhaustion,  146 

if  constitutional  debt  limit  exceeded,  146 

if  statute  puts  no  limit  on  amount  and  extra  work  exceeds,  146 

conditional  award  on  making  of,  invalid,  143,  146 

necessity  for,  not  avoided  by  splitting  up  time  of  use  of  goods  or 
amounts  of  purchase,  146 

attempted  rescission  because  none  certified,  143,  145 

implied,  Act  of  Congress  negatives,  5 

available  unexpended  balance  as,  5 

failure  to  make,  when  basis  of  executing  contract,  15 
ARBITRATION 

power  of,  possessed  by  municipality,  72,  79 

special  mode  to  exercise  particular  power  may  exclude,  72 

power  to  contract  only  in  writing,  effect  on,  72 

stipulation  for,  152 
ASSIGNMENT  OF  CONTRACT 

public  contracts  may  be  assigned,  when,  208 

survival  of  action  for  damages  to  personal  representative,  test  of 
assignability,  208 

government  contracts,  if  assigned,  invalidated,  209 

contracting  with  third  person  for  material  not  against  federal  statute, 
209 

state  and  municipal  contracts  need  consent  for,  209 

provision  for,  may  be  waived,  209 

if  public  deal  with  assignee,  equitable  rights  acquired,  209 

provision  against,  prevents  assignment  of  instalment,  209 

assignment  of  moneys,  when  permitted,  209 

equitable,  not  within  provision,  209 

510 


INDEX 

[References  are  to  sectional 

ASSIGNMENT  OF  CONTRACT— Con^wwed 

judicial  sale  of  contract,  209 

partnership  change,  209 

in  bankruptcy,  209 

voluntary,  209 

defense  of  invaUdity  of,  must  be  pleaded,  209 
ATTORNEYS— CONTRACT  WITH 

municipalities  possess  power  to,  74,  79 

express  provisions  for  city  attorney,  exclude  another,  74 

additional  counsel,  when  public  body  may  employ,  74 

when  may  employ  counsel  to  defend  pohce  officer,  74 

governor  has  no  implied  power  to  employ,  74 

mayor  forced  into  court  may  be  reimbursed  for,  74 

State  employing,  liable  to  pay  from  own  funds  when  not  permitted 
to  pay  from  claim,  74 
AUDIT 

illegal,  12 

when  judicial  determination,  12 

re-audit,  power  of,  12 
AWARD  OF  CONTRACT 

opening  and  announcing  bids,  not,  143 

acceptance  of  bid  matter  of  discretion,  143 

making,  is  judicial,  143 

may  be  to  one  not  lowest,  143 

until  actually  made,  no  contract,  143 

if  offer  and  acceptance  in  minutes  not  intended  as  contract,  none 
until  formal  writing,  143 

if  named  official  must  sign,  no  award,  until  he  signs,  143 

if  testing  of  machine  basis  of  further  action  needed,  143 

minds  must  meet  on  valid  contract,  143 

conditional,  invalid,  143 

once  made,  no  discretion  to  refuse  contract,  143 

attempted  rescission  after,  because  existing  appropriation  not  certi- 
fied, 143,  145 

acceptance  of  return  of  deposit  after,  no  waiver  of  rights  arising,  143 

contract  by  ordinance  complete  on  acceptance,  144 

approval  by  officials  essential,  145 

certification  of  unexpended  balance  of  appropriation,  essential,  145 

effect  if  work  done  and  no  approval,  145 

approval  by  implication,  145 

liability  of  pubhc  officer  for  refusal  to  make,  14 

BIDS 

form  of,  116 

necessity  for  definite  plans  and  specifications,  113,  116 

511 


INDEX 

IReferences  are  to  sections] 

BIDS — Continued 

necesijity  for  advertising,  114 

patented  articles  not  required  to  be  advertised,  115 

irregularities  in,  116 

bidder's  or  surety's  failure  to  appear  before  Notary,  116 

misrepresentations  by  surety  as  to  qualifications,  116 

erasure  in,  116 

not  invalid  because  not  signed,  if  verification  only  required,  116 

where  surety  member  of  municipal  assembly,  116 

blank, 116 

Opening  the  Bids 

provision  requiring  presence  of  oflBcer  at,  mandatory,   135 
officer  may  not  delegate  duty  to  subordinate,  135 
adjournment  to  bring  officials  together,  proper,  135 
presumption  statute  not  complied  with  where  minutes  of  body 
do  not  show  bids  opened  and  declared,  135 

Advertising  for  Bids,  114 

statutes  are  mandatory  and  must  be  complied  with,  114 

fulfillment  of  preliminaries,  condition  precedent  to  contract,  114 

time  of  publication  must  be  followed,  114 

number  and  class  of  publications  must  be  followed,  114 

plans  and  specifications  must  be  available  during  publication 

period,  114 
notice  must  state  nature  and  extent  of  work  or  supplies,  114 
must  also  state  duration  of  work,  location  of  work,  and  time 

and  place  for  receipt  of  proposals,  114 
specifications  sufficiently  published  by  reference,  114 
advertising  to  let  by  outcry  at  site  not  satisfied  by  letting  by 

outcry  half  a  mile  away,  114 
no  need  to  advertise  for  additions  and  alterations,  114 
slight  irregularities  in  notice,  disregarded,  114 
time  of  advertising  when  not  specified,  reasonable,  114 
if  no  notice  required,  officers  may  award  without  notice,  114 
statute  requiring  advertisement,  not  applicable  to  patented 
articles  unless  statute  prescribes  conditions  for,  115 
BIDS— DEPOSIT  OF 

opening  by  officers,  mandatory,  117 

officer  required  to  open,  may  not  absent  himself  nor  waive  require- 
ment, 117 

effect  of  taking  adjourmnent  after,  to  bring  oflScers  together,  117 
BIDS— DEPOSIT  MONEY  WITH 

provision  for,  mandatory,  120 

purposes  of,  120 

bond  for  loss  on  re-letting  not  enforceable,  when,  120 

if  no  amount  fixed,  reasonable  bond,  120 

512 


INDEX 

[References  are  to  sections] 

BIDS,  DEPOSIT  MONEY  WITR— Continued 

to  forfeit  deposit  on,  requires  notice  of  award,  120 
certificate  of  deposit  or  certified  check,  as,  120 
award  of  contract  is  approval  of,  120 

after  acceptance,  bidder  not  estopped  to  show  preliminaries  illegal, 
and  reclaim,  120 
BIDS— MISTAKE  IN— RESCISSION— RELIEF  IN  EQUITY 
unintentional  mistake  before  acceptance,  119 
where  bid  accepted  and  mistake  revealed,  119 
where  mistake  reduces  bid  total,  bidder  may  rescind,  119 
where  bidder  states  information  secured  by  personal  investigation, 

not  from  public  estimate,  effect  of,  119 
mutual  mistake,  reformation  or  rescission  of,  119 
BIDS— MODIFICATION  OF 
none  after  opening,  118 
before  acceptance  or  action  on,  but  after  time  limited  for  submission, 

118 
by  letter  or  telegram  before  opening,  118 
permissible  without  loss  of  deposit,  when,  1 18 
BIDS— REJECTION 

if  right  reserved,  may  reject  all,  147 

if  award  to  one  not  lowest  bidder,  effect  of  rejecting  latter's  bid,  147 

statute  not  for  benefit  of  bidder,  147 

courts  may  not  control  rejection  of  bids,  147 

mandamus  if  award  made  in  disobedience  to  law,  147 

if  statute  gives  choice  of  bidder,  award  is  judicial  and  officers  may 

not  arbitrarily  reject  lowest  and  accept  higher,  147 
mandamus,  even  if  award  made  and  proceedings  regular,  successful 

bidder  not  entitled  to,  148 
mandamus,  modern  tendency  inchnes  toward,  148 
Unsuccessful  Bidder 

may  not  sue  on  lowest  bidder  statute,  149 

not  bring  taxpayer's  action,  unless  affected,  149 
not  compel  by  mandamus,  149 
not  maintain  action  for  damages,  149 
not  obtain  injunction,  149 
BOND  OF  CONTRACTOR 

legislature  may  require,  for  various  purposes,  324 
without  express  authority  public  may  require,  325 
surety  for  hire,  no  tenderness  to,  326 
bond  and  contract  read  together,  326 
bond  good  though  contract  void,  327 
contract  void  not  recorded,  bond  valid,  327 

if  bond  fails  to  follow  statute,  recovery  on  part  which  follows  statute, 
327 

513 


INDEX 

[References  are  to  sections] 

BOND  OF  CONTRACTOR— Con^wM^d 

if  bond  fails  to  indicate  obligee  named  in  statute,  bond  good  as 

common  law  bond,  328 
statutory  provision  requiring,  waiver  of,  329 
sufficiency  of,  discretion  as  to,  330 
Under  State  StatiUe 

liable  for  labor  and  materials  put  into  work,  331 
labor  and  materials  furnished,  what  classes  within,  331 
Under  Federal  Statute 

technical  rules  do  not  apply,  332 

not  limited  to  labor  and  materials  directly  incorporated  into 

work,  332 
construed  liberally,  332 

labor  and  materials  furnished,  what  within,  332 
Federal  Act,  limitations  on  proceedings,  under,  333 
if  no  action  brought  by  United  States  in  six  months  laborer  or 

materialmen  may  sue  in  its  name,  333 
beneficiaries,  who  are,  334 
sub-contractors  may  sue,  when,  335 
rights,  when  bond  runs  to  public  body,  336 
intention  to  benefit  third  person  inferred,  336 
faithful  performance,  where  condition  of,  is,  337 
negligence,  where  conditioned  for,  338 
pubhc  body,  how  far  obliged  to  retain  money,  339,  340 
release  of  surety,  how  far  effected  through  failure  of  creditors 

of  contractor  to  file  claims  and  obtain  preference,  341 
discharge  of  bond,  effect  on  claims  of  laborers  and  materialmen, 

342 
renewal  of  contract,  effect  on  bond,  343 
abandonment  of  contract,  subrogation,  344 
subrogation  superior  to  equitable  assignee,  344 
public  officer  or  body,  liability  of,  for  failure  to  take  bond,  345, 

346 
materialmen  or  laborer  bound  when  record  shows  no  bond 

given,  346 
claim,  verified  statement ,  as  condition  precedent  to  liability, 
347 
BORROWING  MONEY— INCURRING  INDEBTEDNESS 
borrowing  by  bonds,  power  must  be  express,  77 
power  to  contract  debt  on  credit  recognized,  77 
BREACH  OF  CONTRACT.     See  also  Renunciation;  Partial  Per- 
formance 
failure  to  make  payments,  302 

where  stipulation  for  payment  subsidiary  term,  failure  to  pay,  not 
sufficient  for  abandonment,  302 

514 


INDEX 

[References  are  to  sections] 

BREACH  OF  CONTRACT— Cowimwed 

if  public  has  time  by  charter  to  pay  claims,  delay  for  that  time  no 
breach,  302 

acceptance  of  previous  payments  without  protest,  effect  of,  302 

issuance  of  certificate  showing  payment  due,  justifies  terminating 
contract,  302 

temporary  inability  or  deUberate  refusal  to  pay,  302 

ruling  that  contractor  with  public  may  not  expect  prompt  payment 
questioned,  302 

if  public  body  refuses  goods,  contractor  must  sell  within  reasonable 
time,  303 

contractor  keeping  goods  as  own,  recovery,  303 

executory  contract,  making  new  contract,  consideration,  309 

if  party  to  executory  contract  refuses  to  perform,  unless  additional 
compensation,  public  may  sue  for  damages  or  waive  breach, 
treat  contract  as  ended  and  make  new  contract,  309 

effect  of,  310,  311 

abandonment  of  entire  contract  without  justification,  effect,  310 

abandonment  if  wilful,  even  though  performance  substantial,  effect, 
310,  311 

substantial  performance  permits  recovery  with  deduction,  310 

public  when  liable  for  part  performance,  310 

refusal  to  instal  material,  not  wilful,  where  justified  in  not  figuring  on, 
311 

abandonment  voluntary,  if  contract  divisible,  admits  recovery  for 
part  performed,  311 

rescission  for,  312 

right  to  rescission  unquestioned  where  contract  entire,  and  broken, 
312 

if  contract  divisible,  effect  of,  312 

prevention  of  performance,  effect  of,  313 

contractor  stopped  cannot  go  on  and  increase  damages,  313 

stopping  work,  dissatisfaction  with  progress,  314 

provision  that  engineer  may  cancel  if  performance  unnecessarily  de- 
layed, does  not  give  option,  314 

if  right  to  terminate  covers  each  section  of  work,  will  not  justify 
entire  abrogation,  314 

reserved  right  to  annul  does  not  confer  upon  engineer  right  to  de- 
termine further  continuance  of  contract,  314 

annuhnent,  if  contractor  refuses  to  go  on,  no  need  of  approval  by 
higher  oflBcer,  314 

failure  to  object  or  take  advantage  of  breach  during  performance,  316 

breach  by  failure  to  perform  condition  precedent,  prevents  recovery, 
317 

repair,  unconditional — express  covenant,  effect  of,  318 

515 


INDEX 

(References  are  to  sections] 

BREACH  OF  CONTRACT— Con^m wed 

leased  premises,  covenant  to  surrender  in  same  condition  allowing 

for  reasonable  wear  and  damage  by  elements,  effect,  318 
renewal  of  lease,  implied  surrender,  effect  of  on  such  covenant,  318 
covenant  to  renew  lease,  319 

monej'  owed  contractor  on  previous  contract  may  be  set-off  against 
subsequent  liability,  320 
BRIBE,  TO  INFLUENCE  OFFICER.   See  Public  Officers 

CHARTER 

contracts  must  comply  with,  11 

persons  dealing  with  officers  are  charged  with  notice  of  their  authority, 
12 

general  laws  are  part  of,  192 

legislative  power  to  alter,  8,  80 

contractors  cannot  know  all  provisions  of,  90 
CLAIM 

allowance  or  rejection  of,  is  executive  act,  367 

illegal  allowance  of,  367 

re-consideration  of  allowance  of,  367 
CLAIM,  NOTICE  OF 

necessity  of  presenting,  as  condition  precedent  to  suit,  366 

provision  for,  when  merely  Statute  of  Limitation,  366 

necessity  to  plead  and  prove,  366 

statute  not  applicable  in  Federal  courts,  366 

claimant  against  county  may  sue  directly,  366 

unverified  statement,  effect  of,  366 

cannot  be  waived,  366 

as  condition  to  maintain  action  on  contractor's  bond,  347 
COMPENSATION  OF  CONTRACT 

rules  controlling,  207 

where  specified,  limited  thereby,  207 

contract  price  controls  as  far  as  applicable,  207 

if  no  price  mentioned,  reasonable  price  impUed,  207 
COMPETITIVE  BIDDING.    See  Lowest  Bidder,  Letting  to 
COMPLETION  OF  WORK  BY  PUBLIC  BODY 

does  not  depend  on  provision  authorizing,  but  right  to  benefits  of 
contract,  321 
duty  to  reduce  damages,  321 

not  restricted  to  remedy  of  completing,  may  recover  damages,  321 

if  public  undertakes  to  raise  caisson  for  contractor,  can  only  charge 
reasonable  cost,  321 

materials  are  property  of  contractor  until  affixed,  322 

contractor  cannot  compel  use  of  material  left,  322 

surety  completing  work,  appropriating  material  on  site,  liable,  322 

516 


INDEX 

[References  are  to  eectionsl 

COMPLETION  OF  WORK  BY  PUBLIC  BODY— Continued 

public  body  using  material  has  title  against  trustee  in  bankruptcy, 

when,  322 
surplus  earth,  title  to  and  remedies  of  contractor  as  to,  323 
consent  of  engineer  to  remove  earth,  effect  of,  323 
contract  giving  building  to  contractor,  he  may  enter  to  remove,  323; 
COMPROMISE  OF  DISPUTED  CLAIMS 

municipaUties  may  compromise  and  settle  claim  in  dispute,  73 
judgment,  no  power  to  compromise,  73 
unless  adverse  party  has  appealed,  73 
or  is  about  to  appeal,  73 
or  his  time  to  appeal  not  expired,  73 

may  be  compromised  where  all  legal   remedies  to  collect  ex- 
hausted, 73 
when  no  power  in  law  officer  to  settle,  73 
CONDITIONS— PRECEDENT  AND  SUBSEQUENT 

whether  stipulation  is,  depends  on  order  of  performance,  204 
calling  stipulations,  effect  of,  204 
courts  incline  to  construe  as  covenant,  204 
CONFLICTING  CLAUSES 

essential  clause  affecting  general  purpose  of  contract,  177 

first  of  two,  prevails,  177 

if  contract  and  specifications  irreconcilable  and  latter  cannot  be 

ignored,  contract  void,  177 
added  stipulation  modifies,  177 
CONGRESS,  ACT  OF,  AS  CONTRACT 

obligation  of,  81,  187 
CONSIDERATION 

promise  for  promise,  97 
seal,  97 

inadequacy  of,  97 
where  consideration  fails,  97 
doing  what  already  bound  to  do,  97 

where  contractor  refuses  to  perform  unless  given  increased  com- 
pensation, 97,  165 
modification,  consideration  for,  165 
CONSTRUCTION.    See  also  Ambiguity;  Evidence  to  Aid  Construc- 
tion;   General  Expression  Restricted   by  Specific;  Gram- 
matical   Construction;    Implied    Terms;    Law    Governing; 
Practical  Construction;   Prior  Negotiations;  Usages  and 
Customs;    Writing    Construed    against    Party    Drawing; 
Written  Words 
general  rules  of,  170 

primary  purpose  to  discover  intention,  169,  170 
agreement  considered  as  whole,  170 

517 


INDEX 

(Referencea  are  to  sectional 

CONSTRUCTION— Con<mw€d 

doubtful  language  construed  to  support,  not  destroy,  170 

construed  against  person  making  obligation,  170,  183 

words  should  be  given  reasonable  construction,  170,  174 

practical  construction  followed  where  contract  ambiguous,  170,  193 

usage  and  custom  may  be  considered,  170,  176 

all  aids  to  interpretation  have  no  place  when  contract  plain,  170, 

171 
impUcation  caimot  control  express  language,  170,  190 
aids  to,  not  pressed  to  point  of  making  new  contract,  170,  173 
intent  controls  over  inapt  expression,  170,  171 
lapse  of  time  cannot  change  agreement,  170 
words  construed  as  understood  by  parties,  170 
specific  clauses  govern  general,  170,  178 

courts  will  not  make  contract  speak  where  intentionally  silent,  170 
courts  possess  no  power  to  make  new  contract,  170 
result  which  is  lawful  and  valid,  preferred  to  unlawful,  170,  174 
presume  parties  intended  lawful  purpose,  174 
interpreted  for  reasonable  rather  than  unreasonable  result,  174 
where  uncertainty  not  construed  to  place  one  party  at  mercy  of 
others,  174 
CONTRACTS.    See  also  Agreements;  Assignment;  Breach;  Illegal- 
ity; Implied  Contracts;  Lowest  Bidder;  Performance;  Stipu- 
lations OF  Contract;  Ultra  Vires. 
defined  and  classified,  82 

public  contract  controlled  by  same  laws  as  private,  82 
implied  contracts,  classified,  83 
when  implied,  83,  102-111 
essential  elements,  91,  92,  93,  94,  95,  96,  97 

authority  must  exist,  91 

subject  matter  within  corporate  powers,  91 

consideration,  91,  97 

mutuality,  91,  95 

minds  must  meet,  91 

must  agree  on  plans  and  specifications,  91 

must  be  definite  and  certain,  91,  96 

intent  ascertainable  from  language,  91 

conflict  between  and  specifications,  91 

where  term  to  be  settled,  effect,  91 

delivery  essential,  but  no  part  of  contract,  92 
may  be  on  condition,  92 
by  letter  or  telegram,  92 

assent,  must  be  to  the  same  thing  in  the  same  sense,  93 

not  compelled  where  conflict  between  instruments,  93 

omission  to  read,  no  excuse,  93 

518 


INDEX 

(Referencea  are  to  sectional 

CONTRACTS— Conimwerf 
reality  of,  94 

assumed  existence  of  non-existent  facts,  94 
where  mistake  unilateral,  94 
contract  executory,  94 
COVENANTS— DEPENDENT  AND  INDEPENDENT 
determined  according  to  intent,  203 

if  breach  can  be  compensated  independent, — if  not  dependent,  203 
examples  of,  203 
COVENANTS  IMPLIED  BY  LAW— WARRANTIES.   See  also  War- 
ranty; Warranty  of  Performance 
that  public  body  give  contractor  access  and  facilities  for  work,  158 
indispensable  to  effectuate  contract,  implied,  158 
effect  of  failure  to  acquire  right  of  way,  158 
failure  to  furnish  site,  158 
as  to  quaUty  of  ground  or  soil  not  implied,  158 
contractor  may  rely  upon  positive  assertions,  158 
unforeseen  conditions  rendering  performance  impossible,  imply  con- 
dition terminating  work,  158 
none  as  to  wholesomeness  of  water,  68 
CREDIT,  LOAN  OF 

power  to  make,  usually  denied,  45 

constitutions  of  some  States  give  power  to  Legislature,  45 

examples  of  exercise  of  power,  45 

municipalities  without  express  authority  may  not  become  guarantor 

or  surety,  46 
power  to  sell  negotiable  paper,  not  power  to  guarantee  promissory 

note,  nor  bonds,  46 
municipalities  may  act  as  trustee  only  if  gift  for  public  purpose,  47 
if  trust  created  repugnant  to  municipal  purposes  equity  will  appoint 
new  trustee,  47 
CURATIVE  LEGISLATION  VALIDATING  ILLEGAL  CONTRACT. 
See  Illegality;  Ultra  Vires 

DAMAGES.    See  also  Liquidated  Damages 
Partial  Performance 

if  contract  terminated  against  will  of  contractor,  not  confined 

to  contract  price,  but  recovery  allowed  for  all  loss  by  way  of 

profits,  272 
contractor  may  sue  on  common  counts  and  recover  value  of  work 

without  prospective  profits,  272 
if  contractor  fails  to  complete  after  partial  performance,  damage 

is  cost  of  completion,  272 
if  contract  still  executory  damage  is  difference  between  cost  of 

completion  and  contract  price,  272 

519 


INDEX 

[References  are  to  sections] 

DAMAGES— Conhnwed 

if  public  body  accepts  benefits  of  work  done  contractor  may 
recover  value  on  common  counts,  273 

equitable  settlement,  273 

entire  contract,  wilful  refusal  to  perform  entitles  public  body 
to  return  of  instalments  paid,  274 

suspension  of  work,  measure  of,  276,  313,  314 

where  part  of  work  is  performed  by  strangers,  measure  of  re- 
covery, 277 

contract  illegal  in  part  may  be  partly  valid  and  allow  contract 
price,  278 

if  contract  invalid  for  failure  to  observe  requirement  of  law, 
and  complete  performance  prevented  by  law,  recovery  al- 
lowed for  benefits  of  part  performance,  279 
Substantial  Performance 

measure  of  recovery  is  the  contract  price,  less  damage  for 
failure  to  strictly  perform,    281 
Defective  Performance 

difference  in  value  between  what  is  tendered  and  what  is  due  is 
measure,  287 

if  contractor  justified  in  abandoning,  no  damages,  287 
Prevention  of  Performance 

by  public,  contractor  may  recover  on  quantum  meruit,  or  for 
work  completed  and  loss  of  profit,  291,  313,  314 
Impossibility  of  Performance 

continued  existence  of  subject  or  a  condition,  implied  and  de- 
stroyed, 293 

if  contract,  for  payment  of  stated  sum  during  progress,  293 

absolute  contract  to  deliver  finished  structure,  274,  293 

where  contract  annulled  under  reserved  power,  effect  on  sub- 
contractor, 294 

further  performance  prevented  by  State  through  passage  of 
statute,  effect  on  sub-contractor,  291,  294 

contingencies  rendering  performance  impossible   and   causing 
substantial  change  in  nature  and  cost,  296 

non-performance  occasioned  by  public  body,  298,  313,  314 

executory  contract,  wrongfully  abrogated,  298,  313, 314 
Abandonment  during  Performance 

public  body  may  abandon  contract  upon  compensation,  299 

refusal  to  accept  goods  tendered  under  contract,  303 
Anticipatory  Breach 

measure  of  damage,  304,  305,  306,  307 

contract  to  manufacture  goods,  if  repudiated,  not  bound  to 
complete,  303,  304,  307 

520 


INDEX 

(Referencea  are  to  sections] 

DAMAGED— Continued 

if  one  voluntarily  disables  himself  from  performing  before  time 

of  performance  arrives,  307 
where  party  prevents  performance  by  other,  307 
where  contract  abandoned,  public  may  re-let,  308 
Prevention  of  Performance 

contractor  entitled  to  contract  price  for  part  performed,  dam- 
ages   include  special  loss  for  being   prevented   from    com- 
pleting, 313 
stopping  work,  dissatisfaction  with  progress,  314 
where  entire  abrogation,  but  right  existed  only  to  partial  abro- 
gation, 314 
Condition  Precedent 

condition  precedent,  breach  of,  317 
Covenant  to  Keep  in  Repair 

unconditional  express  covenant  to  keep  in  repair,  318 
Covenant  to  Surrender 

in  same  condition  as  at  execution,  damage  by  elements  excepted, 
318 
Completion  of  Work 

if  public  completes  work  and  uses  materials,  322 

appliances  left  by  contractor  taken  by  Government  and  chattel 

mortgagee  demands  possession,  322 
if  plan  changed  and  performance  impossible,  contractor  having 

title  to  surplus  earth,  323 
remedy  provided  by  contract,  exclusive,  368 
if  contract  provides  consequence  of  breach  on  annulment,  350 
DEED 

construction  of,  183 
DEFECTS  IN  PERFORMANCE 

public  body  hable  for  furnishing  defective  plans,  or  material,  287 
if  means  for  protection  followed,  contractor  relieved,  287 
examples  of  defects,  287 

failure  to  perform  according  to  specification,  287 
no  liability  for,  when,  287 
damages  for,  287 
DEFINITENESS  AND  CERTAINTY  OF  CONTRACT 
must  be,  to  be  enforceable,  96 
meaning,  must  be  capable  of  ascertainment,  96 
ambiguity  of  one  clause,  effect  of,  96 
renewal  contracts,  compensation  fixed  by  arbitrators,  96 
duration,  where  fixed  by  some  event,  96 

building,  where  physically  impossible  to  construct  by  plans  or  di- 
mensions, 96 

521 


INDEX 

[ReferenceB  are  to  sections] 

DELAY  IN  PERFORMANCE 

time  generally  not  essential  element,  283 

not  void  ab  initio  because  time  fixed  elapses  before  work  commenced, 

283 
if  time  is  essence  and  exceeded,  effect  of,  283 
time  is  essence  when,  283 

liquidated  damage  provision  renders  time  indefinite,  283 
if  public  body  causes  delay,  remedy,  283 
if  public  body  at  fault,  effect  on  stipulated  damages,  283 
rule  of  apportionment  of  fault,  283 
clause  to  afford  full  opportunity  to  prosecute  work,  time  accrues 

when,  283 
postponing  work  to  more  unfavorable  season,  stipulated  damage 

clause  abrogated,  283 
time  limit  extended  by  amount  of  delays,  283 
unreasonable  delay  in  allowing  contractor  to  proceed,  283 
extent  and  character  of  recovery  for  delay,  283 
where  delay  caused  by  another,  284 
where  under  several  contracts  tune  runs  after  notice,  and  no  notice 

given,  284 
where  public  body  delays  and  suspends  work  because  of  changes,  284 
provision  to  stand  loss  from  unforeseen  obstructions  not  extended  to 

changed  place,  284 
loss  from  delays  in  delivering  materials  will  not  include  defects  in, 

when,  284 
delay,  rejection  of  material,  285 
delay,  waiver,  286 
part  paj-ment  after  time  for  completion,  effect  on  claim  for  damages, 

286 
waiver  of  performance  as  to  time  and  payment  after  such  tune,  not 

waiver  of  stipulated  damages,  286 
if  time  extended  and  work  not  completed,  liable  for  delay  beyond 

extension,  286 
if  reserved  right  to  change  work  not  exercised  properly,  stipulated 

damage  clause  waived,  286 
DELIVERY 

of  contract  essential,  92 
DISCHARGE  OF  CONTRACT 

by  breach,  302,  317 
DURATION  OF  CONTRACT 
fixed  by  some  event,  96 
designation  of  paper  for  legal  notices,  publication  after  stated  period 

good  till  revoked,  206 
if  no  limitation  of  time  on  franchise  but  grant  is  all  may  be  granted, 

perpetual,  if  authority  to  make  perpetual  exists,  206 

522 


INDEX 

(References  are  to  sections] 

DURATION  OF  CONTRACT— Con^mwed 

contract  purporting  to  endure  forever,  not  construed  as  limited,  206 
contracts  to  exercise  public  utility  rights  for  unreasonable  period, 

valid  for  lawful  period,  206 
where  no  period  of  duration  named,  contract  may  be  terminated  on 

reasonable  notice,  206 

EMERGENCY.   See  Implied  Contracts;  Lowest  Bidder,  Letting  to 
EMINENT  DOMAIN 

exercise  of,  may  not  be  limited  by  contract,  9 
contract  against  exercise  of,  not  within  federal  constitution,  9 
ENGINEER.    See  Extra  Work;  Performance  to  Satisfaction  of 

Other  Party;  Rescission;  Reserved  Right  to  Annul 
ENTIRE  OR  SEVERABLE  CONTRACTS 
to  be  determined  by  intention  of  parties,  199 
test  of  single  or  apportionable  consideration,  199 
test  of  singleness  or  divisibility  of  work,  199 
if  compensation  for  repair  of  bridge  determined  by  amount  of  lumber 

put  into  bridge,  entire,  200 
contract  to  pay  weekly  estimate,  effect,  200 
payments  made  in  instalments,  effect,  200 
if  method  of  payment  amounts  to  apportionment  of  consideration, 

severable,  200 
if  contract  consists  of  several  objects  of  work  some  of  which  depend 

upon  terms  which  never  become  effective,  201 
if  contract  for  several  objects  and  one  sum  to  be  paid,  201 
if  instrument  sets  forth  several  contracts  covering  independent  sub- 
jects or  one  contract  covering  separable  subjects,  201 
if  construed  as  divisible  by  contractor,  when  estopped,  202 
EQUITY 

injunction  when  granted   against   interference  with  performance, 

280 
bid  mistake  in,  rescission,  119 
liquidated  damage  clause,  reUef  in,  363 
rescission  in,  242,  249 
injunction  against  making  of  contract,  299 
illegal  contract,  cancellation  in,  64 
taxpayer's  action,  unsuccessful  bidder,  149 
EVIDENCE  TO  AID  CONSTRUCTION 

if  terms  obscure,  may  look  to  extrinsic  circumstances,  194 

manner  in  which  prior  contract  understood  may  be  shown,  194 

not  assumed  contractor  to  bear  losses  from  defects  in  plan  imposed 

against  objection,  194 
if  plans  provide  to  build  dam  to  and  upon  sohd  rock,  and  former  do 
not  meet  rock,  194 

523 


INDEX 

(References  are  to  sectionsj 

EVIDENCE  TO  AID  CONSTRVCTION— Continued 

warrants  admitted  to  show  construction  by  parties,  194 

construction  generally  question  of  law,  194 
EXHAUSTION  OF  POWERS.    See  Power  to  Contract 
EXTRA  WORK 

what  is,  210 

distinguished  from  additional  work,  210 

does  not  include  unforeseen  difficulties,  210 

when  principle  of  entirety  of  contract  not  controlling  on,  211 

entitled  to  pay,  if  occasioned  by  fault  of  other  party,  211 

work  done  or  materials  furnished  voluntarily,  212 

practical  construction  given  consideration,  212 

claim  for,  should  be  promptly  asserted,  213 

if  ordered  to  make  changes,  and  makes  without  protest,  later  accepts 
payment,  gives  receipt  in  full,  cannot  recover,  213 

if  done  with  knowledge  of  public  body  and  claim  for  expected  pay- 
ment made,  implied  promise  for  arises,  213 

engineer  or  architect  has  no  authority  to  order,  214 

if  done  with  knowledge  of  public  body,  214 

order  must  come  from  one  clothed  with  authority,  or  acquiesced  in 
by  public  body,  215 

if  approval  by  particular  officer  required,  216 

may  not  rely  on  oral  order  of  engineer,  216 

provision  that  order  shall  be  in  writing,  condition  precedent  to  pay- 
ment, 216 

no  claim  unless  done  pursuant  to  written  order,  waiver  by  engineer, 
217 

public  body  directing  doing,  estopped  from  claiming  no  written 
order,  218 

waiver  of  written  order  for,  oral  evidence  of,  218 

public  body  may  ratify  failure  of  engineer  to  order  in  writing,  219 

part  payment  with  knowledge,  ratification,  219 

declarations  by  one  or  more  council  members  to  consent  to  changes 
and  allow  extra  pay,  219 

acceptance  and  use  of  building  in  which  unauthorized  work,  effect, 
219 

provision  for  order  in  writing  no  application  to  changes  covered  by 
contract,  220 

changes  by  competent  authority  or  change  in  manner  of  doing  work, 
need  no  written  order,  220 

provision  for  written  order  for  extra  work,  will  not  cover  additional 
work,  220 

contractor  not  defeated  by  obeying  valid  orders,  221 

if  public  body  orders  work  of  superior  quality  or  materials  of  superior 
grade,  222 

524 


INDEX 

[References  are  to  sectional 

EXTRA  WORK— Continued 

if  public  body  causes  work  to  be  done  more  expensively,  223 

if  public  body  prescribes  less  work,  no  rebate  unless  contract  so 

provides,  223 
modifications  saving  cost,  no  reduction  of  contract  price,  223 
allowed  for  filling  placed  on  site  by  other  contractor,  224 
contractor  making  gross  bid  for  entire  work,  assumes  risk  as  to 

nature  of  work,  though  estimates  are  wrong,  225 
contractor  relying  on  misrepresentation  of  site,  226 
if  appliances  furnished  by  public  body  to  accomplish  certain  results, 

prove  inadequate,  226 
contractor  required  to  take  work  down,  do  it  over  or  differently, 

where  insufficiency  of  plans,  cause,  227 
work  not  within  original  plan,  caused  by  deviation  through  erroneous 

change  of  grade  by  engineer,  228 
if  special  statute  authorizing  work  provides  city  not  liable  for  other 

obligation  than  expressed  in  contract,  229 
contractor  directed  by  engineer  to  do  work  a  second  time,  already 

properly  done,  remedy,  230,  231 
duty  of  contractor  to  follow  no  directions  of  engineer,  amounting  to 

changes,  230 
if  officers  have  power  to  bind  for  work  and  materials  outside  provi- 
sions of  contract,  recovery,  231 
contract  provisions  apply  to  such  extra  work  how  far,  231 
if  contract  for  grading  street,  grade  of  which  not  legally  changed 

and  re-grading  not  called  for,  231 
in  paving  contract,  if  stated  amount  of  sand  required,  but  grading 

done  requires  more,  231 
if  public  agrees  or  undertakes  to  do  part  of  work  and  fails,  232 
if  public  body  delays  in  performing,  232 

allowance  for  delay  caused  in  removing  fill,  placed  on  work  by  an- 
other, no  defense  to  claim  for  extra  work  in  removing,  232 
if  in  contract,  quantities  are  estimated  only  when  contractor  bound 

to  furnish  all  materials  required  during  period,  233 
where  value  of  extra  work  exceeds  appropriation,  234 
if  contract  provides  for  alterations  by  engineer  to  be  paid  for  at 

contract  price,  235 
provision  for  increased  payment  for  alterations  ordered  by  engineer, 

limited  in  meaning  by  object  of  contract,  236 
such  provision  will  permit  changes  in  matters  of  taste,  arrangement 

and  detail,  236 
provision  that  all  loss  arising  from  nature  of  work  or  unforeseen 

difficulty  only  applies  to  work  to  be  done,  237 
unforeseen  difficulty  entirely  outside  contract,  unaffected  thereby, 

237 

525 


INDEX 

[References  are  to  eectione] 

EXTRA  WOUK— Continued 

unforeseen  difficulties  ordinarily  assumed  by  contractor,  237 

if  extra  cost  consequent  on  performance  of  exact  terms  of  contract, 
cannot  claim,  237 

contractor  takes  risk  of  increase  in  prices  of  labor  and  materials,  237 

extra  work  caused  by  failure  of  contractor  to  properly  perform,  238 

if  contract  provides  brick  to  be  wet  before  laid,  order  to  take  wall 
do\\Ti,  no  recovery,  238 

if  false  work  to  construct  a  bridge  allowed  during  non-navigable 
period,  extra  work  in  erecting  lift-span  during  navigable  period, 
within  contract,  238 

stipulation  that  all  questions  be  referred  to  engineer  for  decision, 
gives  what  jurisdiction,  239 

provision  for  decision  by  engineer  binding,  239 

action  not  under  contract  but  to  recover  damages  for  breach,  pro- 
vision for  certificate  has  no  application,  239 

such  provision  of  contract  may  be  waived,  239 

conditions  precedent,  240 

limitations  on  time  or  manner  of  presenting  claims  conditions  preced- 
ent to  recovery,  240 

contractor  not  bound  to  perform,  nor  public  body  to  employ  him 
unless  contract  so  provides,  241 

delay  by,  liquidated  damage  clause,  when  inapplicable,  360 

FOURTH  OF  JULY 

appropriation  to  celebrate,  79 
FRANCHISES,  EXCLUSIVE  MONOPOLY,  70 

monopoly  to  remove  offensive  products,  see  Sanitation 

exclusive  privilege  when  not  revocable,  70 

when  may  be  granted,  70 

grants  strictly  construed,  70 

examples  of  exclusive  franchises,  69,  70 

covenant  not  to  grant  exclusive  privilege  to  others  does  not  restrict 
city,  70 

municipality  authorized,  may  grant  franchise  for  street  railway,  71 

power  to  grant  use  of  street  for  railway  spur,  71 
FRAUD.    See  also  Extea  Work;  Performance  to  Satisfaction 

makes  contract  voidable,  98 

not  presumed,  98 

avoidance  after  knowledge  and  retention  of  benefits,  98 

must  act  upon  first  opportunity  and  rescind,  98 

where  contract  partly  executed  when  discovered,  may  continue  and 
sue  for  damages,  98 

representations  as  to  quantities  of  work  and  material,  98 

though  prior  negotiations  merged,  will  not  prevent  basing  claim  on,  98 

526 


INDEX 

[References  are  to  sections] 

FRAUD— Continued 

public  body  may  not  claim  immunity  from  agent's  acts  in  line  of 

duty,  98 
contractor  claiming,  not  estopped  to  change  ground  of  avoidance,  98 
in  certificate  or  decision  of  engineer,  252,  257 

GAS  AND  GAS  COMPANIES.    See  Water  and  Lighting 

GENERAL  EXPRESSIONS  RESTRICTED  BY  SPECIFIC 
to  do  everything  to  make  work  complete,  178 
general  clause  creating  liability  controlled  by  particular,  178 

GIFTS 

to  induce  locating  public  buildings  not  improper,  20,  21 

maintaining  post  ofiice  at  nominal  rental  void,  20 

offer  of  money  to  change  county  seat,  21 

not  illegal  if  advantage  results  to  pubhc,  21 

municipality  may  deed  land  to  state  for  armory  when,  21 

in  consideration  of  street  improvement  or  layout,  22 

void  when  legislative  power  surrendered  or  when  fraud  or  corruption 

shown,  22 
to  individual,  41 

GRAMMATICAL  CONSTRUCTION 

punctuation  not  allowed  to  determine  writing,  182 

ILLEGALITY.    See  also  vltra  vires 

one  inducing  public  officer  to  act  corruptly,  may  not  retire  and  re- 
ceive consideration  back,  99 
implied  contract  will  not  arise  from  retention  of  benefits,  99 
contract,  null  and  void  by  statute,  just  as  void  as  if  made  penal,  99 
not  necessary  to  pronounce  act  void  to  invalidate  contract,  if  act 

made  penal,  99 
contract  merely  unauthorized,  99 
where  parties  not  in  pari  delicto,  99 
where  some  conditions  legal,  99 
right  of  seller  to  recover  specific  property,  99 
power  of  equity  to  enforce,  99 

IMPLIED  CONTRACTS 

public  may  be  bound  same  as  natural  person,  102 

cannot  arise  upon  illegal  contract  from  receipt  of  benefits,  102 

how  impUed  contract  proved,  102 

taking  or  using  private  property,  when  arises,  103,  109 

when  competitive  bidding  statutes  do  not  apply,  103,  107 

where  money  received  or  property  appropriated,  104 

when  obhgation  arises  for  money  had  and  received,  105 

occupation  of  property,  holding  over  beyond  term,  106,  110 

emergency  contract,  107 

527 


INDEX 

[References  are  to  sections] 

IMPLIED  CONTRACTS— Confinwed 

where  thing  of  absolute  necessity  required,  107 

where  officers,  under  mistaken  power,  obtain  for  corporate  purposes 

materials  or  services,  107 
obligation  on,  when  will  not  arise,  108 
cannot  arise  where  express  contract  forbidden,  nor  where  manner 

prescribed  not  followed,  108 
exceptions,  where  benefits  received,  108 
not  implied,  in  favor  of  official,  108 
sometimes  will  arise  if  not  against  public  policy,  108 
mere  irregularity  will  not  defeat,  where  benefits  received,  108 
when  estoppel  controls,  108 
when  implied  to  prevent  unjust  enrichment,  108 
no  liability  on  quantum  meruit  under  void  contract,  108 
when  liable  for  reasonable  value,  108 
for  trespass  in  use  of  private  property,  110 
right  to  waive  tort  and  sue  on  contract,  110 
what  ratification  sufficient,  110 

employing  attorney  to  defend  officer,  not  adoption  of  tort,  110 
liable  for  value  of  use  of  house  obtained  by  trick  for  pest  house,  110 
Volunteer 

none  arises  from  purely  voluntary  services,  84,  HI 

voluntary  performance  of  services  insufficient,  unless  properly 

ratified,  or  request  implied.  111 
acceptance  and  use  with  knowledge.  111 

when  officer  disbursing  money  out  of  pocket  to  perform  duty, 
not  considered  volunteer,  111 
when  public  body  liable  for  failure  to  perform  public  duty,  HI 
IMPLIED  TERMS 
in  offer,  86 

existing  law  at  time  and  place  of  contract,  191,  192 
must  arise  from  language  employed,  192,  288 
contrary  to  express  terms,  not  allowed,  192 
contractor  not  required  to  do  something  outside  of  contract,  which 

belongs  to  public  body,  192 
each  party  will  do  nothing  to  prevent  other  party,  192,  307 
good  faith  in  making  and  performance,  192 
the  term  reasonable  implied,  192 
general  law  made  part  of  every  charter,  192 

contract,  impossible  of  performance  legally,  implied  condition  of 
termination,  291,  292 
IMPOSSIBILITY  OF  PERFORMANCE 
unforeseen  conditions,  288 

executory  contract  absolutely  to  do  possible  act,  288 
implied  conditions  when  relieve  from  unqualified  obligation,  288 

528 


INDEX 

(References  are  to  Bcctiona] 

IMPOSSIBILITY  OF  PERFORMANCE— Continued 

exceptions  to  rule,  288 

where  performance  absolutely  impossible,  289 

legal  impossibility,  290 

contract  lawful  in  inception,  becoming  unlawful  or  legally  impossible, 
290 

if  price  not  to  be  paid  till  final  completion  and  further  execution 
impossible  by  act  of  law,  291 

if  performance  prevented  by  act  of  public  body,  remedy  of  con- 
tractor, 291 

by  operation  of  law,  291 

if  performance  depends  on  continued  existence  of  thing,  destruction 
by  enactment  of  law,  terminates,  291 

passage  of  general  law  affecting  sub-contractor  and  general  con- 
tractor equally,  not  a  breach,  291 

adopting  new  rules  governing  inspection  and  acceptance  of  work  or 
supplies,  when  not  a  breach,  291 

impossibility  by  act  of  God,  inevitable  necessity,  292 

if  law  creates  the  duty,  the  law  excuses  if  violation  of  law  involved,  292 

so,  if  railroad  company  may  not  construct  road  without  consent,  292 

rule  that  act  of  God  will  not  relieve  from  absolute  promise,  not  ap- 
pUed  to  certain  contracts,  292 

implied  condition  in  executory  contract  performance  shall  not  be 
rendered  impossible  by  intervMition  of  superior  agency,  292 

act  of  God,  destruction  of  subject  matter,  293 

contract  to  erect  building  before  completion,  destroyed  by  fire  or 
other  casualty,  293 

some  contracts  subject  to  implied  conditions  which  will  excuse  per- 
formance, 293 

destruction  of  specific  subject  by  fire,  lightning,  flood  or  tornado,  293 

contract  to  deUver  certain  kind  of  hay,  where  entire  failure  of  crop,  293 

absolute  contract  to  furnish  coal  not  relieved  by  strike,  293 

nor  absolute  contract  to  construct  tunnel  and  all  responsibility  for 
nature  of  soil  assumed,  293 

hardship  or  loss  to  one  party  or  uselessness  of  result  to  other,  not 
considered  in  absolute  contract,  293 

if  contractor  with  sub-contractor  fails  to  provide  against  termination 
of  principal  contract  under  reserved  power,  294 

liability  to  sub-contractor  where  further  performance  prevented  by 
statute,  294 

death  or  sickness  excuses  in  contract  for  personal  services,  295 

where  conditions  essential  to  performance  do  not  exist,  296 

if  contingency  arises  which  renders  performance  impossible  and 
necessitates  substantial  change  in  nature  and  cost,  contingency 
terminates,  296 

529 


INDEX 

[References  are  to  sectional 

IMPOSSIBILITY  OF  TERFORMANCE— Continued 

if  contract  to  furnish  commodity,  so  long  as  reasonably  possible 
and  uncertainty  of  venture  in  minds  of  parties,  contract  not  ab- 
solute and  contractor  relieved  where  not  reasonably  possible  to 
longer  furnish,  297 

reasonable  necessity  will  not  require  absolute  or  physical  impossi- 
bility, 297 
INDEMNIFYING  PUBLIC  OFFICIALS 

municipalities  have  implied  power  of,  42,  43 

false  imprisonment  or  other  acts  in  line  of  duty,  43 

libel  or  other  torts,  43 

for  money  paid  in  sudden  emergency,  43 

JOINT  AND  SEVERAL  CONTRACTS 

when  contract  joint,  when  several,  198 
JUDICIAL  CONTROL 

courts  may  not  review  absolute  State  power  to  incur  obligations 

even  though  purpose  useless,  7 
because  motives  of  legislators  improper,  7 
or  because  fraud  and  corruption  secured  legislation,  7 
municipalities  not  subject  to  judicial  control  in  exercise  of  powers,  7 
except  in  cases  of  fraud,  7 
or  gross  abuse  of  power  or  discretion,  7 
act  of  Congress,  its  conduct  or  motives,  not  reviewable,  7 
same  rule  applies  to  the  executive,  7 
judicial  functions  of  municipal  authorities  reviewable,  7 

LAW  GOVERNING  CONTRACT 

pubUc  contracts  interpreted  same  as  private  contracts,  172 

law  at  date  of  execution  controls,  172 

matters  of  execution  and  validity  determined  by  law  of  place,  172 

matters  relating  to  performance,  by  law  at  place  of  performance,  172 

matters  of  remedy,  by  law  of  forum,  172 
LEASE 

of  park  lands,  40 

of  common  lands,  76 

covenant  of  renewal  of,  319 

covenant  to  surrender  in,  318 

surrender  and  acceptance  of,  318 
LEGISLATIVE  POWER 

pMDwers  delegated  to  municipalities  subject  to  change,  8,  80 

private  or  proprietary  rights  only  subject  to  contract  clause  of  con- 
stitution, 8 

where  purpose  of  contract  private,  legislature  cannot  compel  entry 
into  contract,  8 

530 


INDEX 

(References  are  to  sectional 

LEGISLATIVE  VOWER— Continued 

property  acquired  as  agent  of  the  state  subject  to,  8 
property  held  in  private  capacity  is  not  subject  to,  8 
municipal  revenues  for  municipal  purposes  and  legislature  cannot 

make  contracts  to  expend  them  without  municipal  consent,  8 
barter  of,  9 

State  or  municipality  may  not  agree  to  refrain  from  exercising,  9 
legislative  discretion  conferred  cannot  be  surrendered  by  contract,  9 
contract  not  to  exercise,  not  binding,  9 
exercise  may  not  be  delegated  to  private  individuals,  9 
police  power,  power  of  taxation  and  of  eminent  domain,  cannot  be 

surrendered,  9 
State  or  municipality  when  authorized  may  divest  itself  of  power 

to  regulate  rates,  9 
State  itself  may  not  contract  these  powers  away,  9 
constitutional  protection  of  obligation  of  contract  will  not  protect,  9 
city  when  authorized  may  make  inviolable  contract  fixing  rates,  9 
right  to  use  streets  for  private  purpose,  9 
surrender  of,  binding  successors,  10 

in  exercise  of  legislative  powers,  officers  may  not  bind  their  suc- 
cessors, 10 
when  acting  in  private  capacity  they  may  exercise  business  powers 

same  as  a  natural  person,  10 
personal  or  professional  service  contract  will  bind  succeeding  officials, 

10 
scheme  by  town  to  burden  new  city,  10 
contract  for  county  printing,  10 

erecting  bridge  and  agreeing  to  maintain  it  perpetually,  10 
lease  by  national  government  binds  for  fiscal  year,  10 
LETTING  OF  PUBLIC  CONTRACTS 

when  statute  conferring  power  requires  advertising,  condition  pre- 
cedent to  exercise  of  power,  112 
prior  appropriation  is  condition  precedent,  112 
making  provision  in  tax  levy  is  condition  precedent,  112 
approval  by  head  of  department  is  condition  precedent,  112 
or  vote  of  electors  is,  112 
definite  plans  and  specifications  are,  112 
written  contract  is,  112 

opening  of  bids,  manner  prescribed,  condition  precedent,  112 
Plans  and  Specifications,  Necessity  for,  113 

essential  though  competitive  bidding  statute  does  not  require, 

113 
must  be  sufficiently  definite  to  require  competition,  113 
permitting  bidder  to  propose  plans  and  specifications,  prevents 
competition,  113 

531 


INDEX 

[References  are  to  sections] 

LETTING  OF  PUBLIC  CONTRACTS— Conhnwed 

omission  to  require  sufficiently  definite  specifications,  violation 

of  statute,  113 
while  statute  controls  public  oflBcer,  does  not  deprive  him  of 

reasonable  discretion,  113 
may  insert  provisions  to  exclude  irresponsible  bidders,  113 
ambiguity  of,  contract  invalid,  113 
indefiniteness  of  amount  of  work,  contract  invalid,  113 
where  no  plans  and  specifications  submitted,  113 
mere  summary  of  general  results,  no  basis  for  competition,  113 
contract  authorizing  changes  which  in  value  may  exceed  amount 

fixed  for  non-competitive  bidding,  invalid,  113 
where  alternative  materials  permitted  and  plans  sufficient  for 
one  kind  and  contract  ambiguous,  who  shall  decide  which 
kind  to  be  used,  indefinite  and  void,  113 
ofiicials  may  limit  kind  and  quahty  of  materials,  when,  113 
officials  may  not  fix  price,  113 
omitting  quantities  of  material,  invalid,  113 
proposals  calculated  to  exclude  competition,  invalid,  113 
for  alternative  materials,  proper,  113 
lump  sum  bids,  proper,  113 

unit  prices  based  upon  estimated  quantities,  proper,  113 
unbalanced  bids  not  increasing  cost,  proper,  113 
time  during  which  notice  for  proposals  and  bids  pubhshed, 

material,  114 
medium  in  which  advertisement  appears,  material,  114 
essential  that  notice  puts  bidders  on  equahty,  114 
advertising  for  bids  essential,  114 
LIGHTING.    See  Water  and  Lighting 
LIQUIDATED  DAMAGES 

stipulations  for,  effect  of,  348 

modern  rule  not  to  look  on  with  disfavor  or  construe  strictly  as 

penalty,  348 
penalty,  whether,  to  be  determined  from  fair  and  reasonable  con- 
struction, 348 
if  actual  damages  not  uncertain,  difficult  of  ascertainment,  dispro- 
portionate or  extravagant,  clause  given  effect,  348,  357 
each  case  determined  by  own  facts,  348,  355 
intention  of  parties,  how  they  regarded  provision,  controls,  348 
remedy  parties  provide,  exclusive,  349,  361 
if  contract  provides  for  failure  to  commence,  forfeiture  of  retained 

percentage,  this  exclusive,  349 
time  clause,  not  of  essence  where  contract  provides  remedy  for 

breach,  350 
provision  for,  when  not  a  penalty,  352 

532 


INDEX 

[References  are  to  sectional 

LIQUIDATED  DAMAGES— Continued 

when  certain  percentage  of  each  instalment  retained  as  security  for 

full  performance,  effect  of,  352 
amount,  referring  to  as  "liquidated  damages"  or  "penalty,"  effect 

of,  353,  354 
if  subject  matter  of  contract  of  uncertain  value,  effect  of,  355 
where  several  covenants,  of  which  there  may  be  several  breaches 

and  one  sum  stated  to  be  paid,  penalty,  356 
where  several  undertakings  or  agreements  of  different  degrees  of 

importance,  and  for  some  damages  ascertainable  and  for  others 

not,  or  less  disproportionate  and  one  sum  named,  penalty,  356 
if  clause  relates  to  performance  of  single  act  or  condition,  356 
penalty,  when  courts  will  regard  as,  357 
ascertainment  of  damages,  difficulty,  357 
if  sum  provided,  unreasonable  or  disproportionate,  357 
if  bond  for,  to  secure  the  construction  of  public  work,  to  be  operated 

in  exercise  of  a  franchise,  is  liquidated,  358 
deposit  money,  when  treated  as,  359 
if  no  loss  suffered  for  failure  to  carry  out  bid,  effect,  359 
where  contract  re-let  without  re-advertising,  effect,  359 
check  deposited  for  stated  purpose,  effect,  359 
delay,  provision  for  payment  of,  360 

uncertainty  in  estimating  damages,  makes  clause  liquidated,  360 
annulment,  forfeiture  of  retained  percentages,  on,  360 
when  stipulation  for,  no  longer  binding  and  not  revived,  360 
amount  fixed  to  be  paid  for  cancelUng  contract,  taken  as  measure  of 

damage  for  illegal  refusal  to  award,  361 
actual  damages,  not  necessary  to  prove,  to  recover,  361 
interest  not  added  to,  361 
waiver  of,  362 

revival  of  clause  for,  360,  362 
equity,  relief  in,  from  clause  for,  363 
LOAN  OR  GIFT  OF  MONEY 
to  individual,  41 

tax,  power  to,  used  only  for  corporate  purpose  or  public  purpose,  41 
moral  obligation,  payment  of,  42 
indemnifying  pubhc  officers  as,  43 
LOWEST  BIDDER,  LETTING  TO.    See  also  Bids 

if  statute  requires  letting  to,  contract  not  so  let,  void,  121 

if  competitive  bidding  statute  omits  to  require  acceptance  of  lowest 

proposal,  matter  discretionary,  121 
rejection  of  bids,  limitations  on,  122 
examination  and  award,  judicial  in  nature,  122 
award  when  free  from  fraud  or  bad  faith  not  reviewable  by  court,  122 

533 


INDEX 

(References  are  to  sections] 

LOWEST  BIDDER,  LETTING  TO— Continued 

if  statute  mentions  lowest  and  best,  or  lowest  responsible  bidder, 
discretion  of  award  not  reviewable,  122 

officers  may  not  arbitrarily  refuse  to  accept  lowest  bid  unless  facts 
justify,  122 

lowest  bidder  not  necessarily  entitled  to  contract,  123 

may  award  to  other  than  lowest  bidder  by  vote  of  governing  body, 
when,  123 

opening  of  bids,  ascertainment  of  lowest  bidder  and  announcement 
thereof,  not  an  award,  123 

if  bidder  notified  his  bid  lowest  and  contract  awarded,  no  power  to 
reject  and  re-advertise,  123 

making  award  on  contingency,  124 

acceptance,  conditional  upon  appropriation,  issue  of  bonds,  or  pas- 
sage of  legislation,  invalid,  124 

statutes  affecting,  construed  to  accomplish  purpose,  125 

in  absence  of  statutory  limitations,  agreement  made  by  proposal 
and  acceptance,  126 

award  not  required  to  lowest  bidder  unless  statute  prescribes,  127 

pubhc  bidding  and  advertising  not  applicable  to  patents  or  monopoly, 
128,  133 

where  more  than  one  source  of  supply,  but  selection  involves  choice 
of  quality  and  quantity,  through  special  skill,  competitive  statute 
not  applicable,  128 

specification  of  particular  kind  of  material,  not  unlawful  limitation 
of  competition,  128 

purchase  of  patented  articles  allowed  on  patentee  agreeing  to  fur- 
nish at  price,  128 

or  upon  payment  of  a  royalty,  128 

competitive  statute  not  applicable  to  service  continuous  in  character 
but  terminable  at  pleasure  by  pubhc  body,  128 

not  applicable  to  contracts  for  personal  or  professional  services,  128, 
134 

bids  requiring  the  use  of  certain  material  or  better,  not  violative,  128 

some  jurisdictions,  limit  purchase  of  patents  for  municipal  purposes, 
not  where  it  assesses  property  of  individuals,  128 

extra  work  need  not  be  upon  separate  advertisement,  129 

contract  may  contain  provision  for  payment  for  all  extra  work,  129 

contingencies  for  extra  work  must  be  provided  in  contract,  or  ad- 
vertising required,  129 

if  competitive  bidding  statute  limited  and  alterations  or  additions 
not  included,  no  advertising  required,  129 

contracts  under  stated  amounts  may  be  let  without  competitive 
bidding,  when,  130 

534 


INDEX 

(Ref-erences  are  to  sections] 

LOWEST  BIDDER,  LETTING  TO— Continued 

supplies  upon  distinct  orders  involving  less  than  the  Umit  for  non- 
competitive bids  but  exceeding  it  in  aggregate,  invalid,  130 

where  provisions  of  statutes  affect  certain  classes  of  pubUc  contracts, 
all  others  require  no  competition,  131 

emergency  contracts,  statute  not  applicable  to,  132 

where  services,  materials  and  property  immediately  needed,  not 
applicable,  132 

officer  charged  with  positive  duty  need  not  wait  to  get  appropriation 
to  respond  to  his  immediate  duty,  132 

if  statute  includes,  there  must  be  competition,  132 

MISTAKE.    See  also  Bid,  Mistake  in;  Rescission;  Validity 

contract  voidable  for,  90 

of  law,  90 

of  fact  and  law,  90 

not  mutual,  90 
MODIFICATION  OF  CONTRACT 

no  right  to  unless  contract  provides,  163 

by  mutual  consent,  163 

can  only  be  effected  by  authorized  officials,  163 

exercise  of  right  not  extended,  163 

reserved  right  to  make  changes  as  affecting  mutuality,  163 

right  to  stop  work  will  not  arise  from  power  to  change,  163 

no  absolute  power  to  modify  exists,  164 

if  contract  oppressive,  power  exists  to  allow  additional  compensa- 
tion or  annul,  164 

may  waive  contract  conditions,  not  statutory  conditions,  164 

consideration  for,  what  sufficient,  165 

consideration  where  contractor  threatens  to  abandon  contract  unless 
increased  compensation  given,  165 

by  oral  agreement,  166 

waiver  of  delay  under  contract  required  in  writing  and  acceptance 
and  payment  for  structure  delivered,  as  modification,  166 

if  statute  requires  modification  in  writing,  oral  invalid,  166 

question  of,  usually  one  of  fact,  166 

new  agreement  takes  place  of  old,  167 

effect  of  on  liquidated  damage  clause,  167 

if  results  in  illegal  agreement,  no  change  effected,  167 

change  in  many  particulars  abrogates  original  contract,  167 

if  cost  reduced  by,  public  not  entitled  to  benefit  of  reduction,  167 

letter  attached,  or  contemporaneously  delivered,  as,  186 

ordinance,  as,  187 

added  stipulation,  modifies  main  stipulation  of  contract,  187 

535 


INDEX 

[References  are  to  sections] 

MONEYS  FOR  PURPOSES  NOT  PUBLIC,  EXPENDITURE 

Nation  and  State  may  expend  public  money  for  any  declared  public 

purpose,  79 
unless  restrained  by  constitution,  79 

municipalities  may  not  expend  money,  except  for  purpose  clearly 
public,  79 
expenditure  to  celebrate  important  events,  79 
to  celebrate  centennial  of  city,  county  or  town,  79 
to  entertain  or  dine  citizens  or  guests,  79 
towns,  purposes  for  which  they  may  expend,  79 
power  may  be  conferred  upon  municipalities  to  provide  entertain- 
ment for  visitors  and  celebrate  events,  79 
MORAL  OBLIGATION,  PAYMENT  OF 
State  may  pay  honorable  or  just  debt,  42 
funds  for  exempt  firemen,  valid  as,  42 
additional  cx)mpensation  to  contractor,  42 
municipalities  may  indemnify  officers,  42,  43 
claims  against  city  supported  by  moral  obligation  may  be  legalized 

by  legislature,  42 
legislature  may  compel  a  municipality  to  pay  a  debt  which  has 
merit,  42 

even  though  Statute  of  Limitations  has  run,  42 
legislature  may  require  municipality  to  audit  and  pay  debt  of  a 

meritorious  nature  though  not  cognizable  in  law  or  equity,  42 
legislature  may  not  enforce  payment  of  gratuity  or  charity,  by 
municipality,  42 
MUTUALITY 

lack  of,  nudum  pactum,  95 
unilateral  privilege,  not  lack  of,  95 

though  exact  words  wanting  to  create,  courts  imply  intended  cov- 
enant, 95 
reserved  right  to  annul  or  change  contract  as  lack  of,  95 
principle  not  applicable  to  executed  contracts,  95 
privilege  to  inspect  books  under  option  to  purchase,  95 

NOTICE,  MEANING  AND  KIND  OF 

when  contract  requires  notice  to  create  liability  or  impose  obliga- 
tion, personal  notice  intended,  162,  175 
if  party  conceals  self  to  avoid  service,  effect,  175 
statute  requiring  notice,  written  notice,  175 
to  make  repairs,  185 

OBLIGATION  OF  CONTRACT,  IMPAIRMENT  OF 

when  repeal  of  statute  conferring  power  will  not  impair,  80 
opportunity  conferred  by  statute  not  contract  power,  80 

536 


INDEX 

[References  are  to  sections] 

OBLIGATION  OF  CONTRACT,  ETC.— Continued 

where  no  power  to  make  continuing  contract,  repeal,  effect,  80 
empowering  municipality  to  deal  does  not  compel  dealing,  80 
statute    conditionally   prohibiting   municipal    competition,    repeal 

allows,  80 
franchise  granting  to  another  similar  privilege,  as,  80 
contract  bartering  powers  of  sovereignty,  not  protected,  80 
legislature  may  not  deprive  municipality  of  power  to  carry  out 

lawful  contract,  nor  can  it  impair  obligation,  80 
franchise  is  a  contract  and  may  not  be  impaired,  80 
rights  acquired  under  statute,  in  nature  a  contract,  cannot  be  im- 
paired, unless  repeal  reserved,  80 
exclusive  right  to  light  by  gas  not  impaired  by  contract  to  light  by 

electricity,  80 
repeal  of  statute  under  which  award  made,  effect,  80 
franchise,  failure  to  exercise,  80 

contract  consisting  of  Acts  of  Congress  when  acted  upon,  may  not 
be  changed,  81 
OBLIGATIONS  OF  OTHERS,  POWER  TO  ASSUME 
no  power  to  assume  obligations  of  others,  78 

no  power  to  aid  railroad  in  performing  own  duties  and  responsi- 
bilities, 78 
no  power  to  assume  obligation  of  another 
to  restore  a  street,  78 
to  build  a  bridge,  78 
to  maintain  a  bridge,  78 

to  pay  part  of  expense  of  building  or  repair,  78 
OFFAL 

monopoly  to  remove,  70 
OFFER  AND  ACCEPTANCE 
essential  elements,  84 

time  of  acceptance,  reasonable,  if  no  time  fixed,  84 
acceptance  must  meet  offer  and  be  unconditional,  84,  89 
acceptance  of  goods  and  use  as  implying  promise,  84 
voluntary  services,  when  implied  promise  to  pay,  84 
distinction  between  acceptance  of  an  offer  and  an  authorization  to 

agent  to  make  a  contract,  84 
written  acceptance,  requirement  of,  when  satisfied,  84 
proposal  in  accordance  with  advertisement  and  acceptance  make 

binding  agreement,  85 
terms  implied  in  offer,  86 
bid  as  offer,  87.    See  also  Bid 

preliminary  negotiations  do  not  make  contract,  88 
contractor's  bid  is  offer,  acceptance  makes  contract,  88 

537 


INDEX 

(References  are  to  sections] 

OFFER  OF  ACCEPTANCE— Conimtied 

preliminaries  affecting  oral  agreement  not  binding  where  writing 

contemplated,  88 
where  agreement  reached  through  correspondence,  its  obUgation  not 

defeated  by  either  party  refusing  signing  formal  writing,  88 
writing  merges  preliminary  negotiation,  88 
terms  varying  proposal  reject  offer,  89 
unaccepted  offer  may  be  withdrawn  or  modified,  89 
time  limited  or  reasonable  time  expiring,  no  longer  open,  89 

OFFICERS.    See  Public  Officers 

PAVEMENT,  MAINTENANCE  CLAUSE.     See  also  Stipulations  op 
Contract 

validity  of,  156 

if  maintenance  clause  provides  for  written  notice  of  defects,  con- 
tractor only  held  to  make  repairs  noticed,  175,  185 

if  provision  that  defects  from  improper  material  or  construction, 
repaired  at  contractor's  expense,  effect,  185 

not  liable  for  repairs,  if  public  substitutes  new  pavement,  185 

if  public  allows  pavement  in  deep  state  of  disrepair,  must  restore  to 
normal  before  contractor  liable,  185 

if  city  puts  repair  duty  on  paving  contractor,  relieves  railroad  com- 
pany from  duty  to  pave  and  liability,  185 

if  company  under  franchise  agrees  to  repave  between  rails,  deter- 
mination what  kind  of  pavement  shall  be  used,  not  reviewable  by 
court,  185 
PERFORMANCE.  See  Abandonment;  Acceptance  of;  Breach  of 
Contract;  Completion  of  Work;  Renunciation;  Defects  in 
Performance;  Delay  in  Performance;  Impossibility  of  Per- 
formance; Performance — Excuse  for  Non-Performance; 
Performance — Partial  Performance;  Performance  to  Sat- 
isfaction OP  Other  Party;  Substantial  Performance 
PERFORMANCE— EXCUSE  FOR  NON- 

where  non-performance  is  occasioned  by  act  of  public  body,  298 

good  faith  implied  condition  of  every  contract,  298 

implied  undertaking  neither  will  intentionally  prevent  other  from 
carrying  out  agreement,  298 

party  preventing  performance  by  own  act  cannot  object  contract 
unperformed,  298 

if  contractor  stopped,  even  with  view  to  obtain  lawful  benefit  for 
public,  latter  liable,  298 

contractor  for  hay  from  certain  sources  hindered  because  supply 
taken  by  Government,  298 

suspension  of  work  caused  by  public  body,  298 

interference  to  prevent  contractor  from  doing  work  improperly,  298 

538 


INDEX 

(References  are  to  eectionfl] 

PERFORMANCE,  ETC.— Continued 

quantum  meruit  sometimes  remedy,  not  suit  on  contract,  298 
executory  contract  wrongfully  abrogated,  damages,  298 
PERFORMANCE— PARTIAL 

complete  performance  of  entire  contract,  usually  condition  precedent 

to  right  of  recovery,  272 
partial  performance  and  subsequent  abandonment  of  without  fault 

of  other  party,  admits  no  recovery,  272 
wilful  violation  prevents  recovery,  272 
some  courts  imply  promise  to  pay  for  benefits  received,  272 
wilful  refusal  to  perform  gives  public  body  right  to  return  of  instal- 
ments paid,  274 
where  both  parties  break  contract,  effect  of,  275 
suspension  of  work,  276 

where  part  of  work  is  performed  by  stranger,  recovery,  277 
contract,  if  illegal  in  part,  may  be  held  vahd  in  part  and  recovery 

permitted,  278 
illegal  contract,  if  chattels  or  supplies  delivered  under,  may  be  re- 
covered in  replevin,  278 
illegal  contract,  if  invalid  because  failed  to  observe  requirement  of 
law,  and  after  part  performance,  complete  performance  prevented 
by  law,  recovery,  279 
if  public  officials  interfere  with  contractor  and  interrupt  performance, 
when  injunction  granted,  280 
PERFORMANCE— TO  SATISFACTION  OF  OTHER  PARTY 
reservation  of  superintendence  implies  reasonable  direction,  250 
public  or  engineer  may  not  act  arbitrarily,  250 
where  public  ought  in  reason  to  be  satisfied,  effect  of,  250 
where  work  or  material  are  to  be  furnished  to  satisfaction  of  arbiter, 

effect  of,  250 
where  appliances  purchased  on  test,  250 
decision  of  arbiter  when  made,  binding,  250 
if  effect  of  clause  that  decision  must  be  reasonable,  reviewable  by 

court,  250 
if  apparatus  meets  test,  effect  of  refusal  to  be   atisfied,  250 
power  granted  designated  person  implies  duty  to  act  fairly,  251 
may  rely  upon  information  obtained  from  other  person,  251 
no  objection  to  choosing  one  who  is  public  oflicer,  251 
stipulations  requiring  certificate  of  engineer,  vahd,  252 
person  nominated  must  act  in  good  faith  and  if  no  fraud  certificate 

conclusive,  252 
stipulations  are  in  derogation  of  common  law  and  not  unduly  ex- 
tended, 252,  253 
stipulations  may  not  oust  courts  of  jurisdiction,  252,  253 

539 


INDEX 

[References  are  to  sections] 

PERFORMANCE,  ETC.— Continued 

general  language  referring  all  questions  limited  by  specific  language, 

252 
provision  that  certificate  be  obtained  before  suit,  effect,  252 
engineer,  powers  of,  not  extended  beyond  submission,  253 
agreement  to  submit  questions  as  to  fulfilment  gives  no  right  to  pass 

on  claim  for  non-fulfilment,  253 
decision  of  as  to  matters  not  submissible,  not  binding,  253 
engineer  has  no  power  to  modify  or  alter  terms  of  contract,  254 
certificate  issued  after  unauthorized  modification,  not  binding,  254 
provision  for  work  to  proceed  under  direction  of  certain  officer  will 

not  authorize  essential  changes,  254 
power  limited  to  changes  contemplated  when  contract  made,  254 
no  power  to  make  material  changes  in  drawings  or  destroy  essential 

identity  of  thing,  254 
if  doubt  as  to  specifications  referring  to  wall  or  walls,  dispute  arises, 

when  decision  is  final,  254 
power  of  engineer  to  require  doing  of  work  apparently  or  doubtfully 

outside  terms  of  contract,  255 
right  of  contractor  to  comply  with  demand  under  protest  and  re- 
cover damages,  255 
effect  of  engineer's  failure  to  notify  contractor  during  progress, 

work  does  not  comply  with  contract,  256 
if  provision  that  payment  not  to  be  made  until  engineer  certifies, 

certificate  is  condition  precedent,  257 
refusal  to  issue  certificate  without  fraud  or  gross  mistake,  will  not 

affect,  257 
certificate  of,  as  to  value  of  extra  work,  condition  precedent  to  pay- 
ment, 258 
provision  for  final  certificate,  condition  precedent  to  enforce  pay- 
ment by  action,  259 
jurisdiction  of  engineer  limited  by  terms  of  contract,  259 
not  extended  to  cover  questions  arising  after  completion,  259 
not  interpreted  to  deprive  parties  of  right  to  judicial  construction 

of  contract,  259,  265 
if  work  stopped  for  delay  and  public  complete,  suit  for  balance  will 

not  require  final  certificate,  259,  268 
arbitration  clause  of  doubtful  application,  not  extended,  259 
arbitration  of  matters  arising  during  work,  which  cannot  be  left  till 

work  completed,  259 
if  action  not  on  contract  but  for  breach,  no  certificate  necessary,  259 
if  nothing  to  show  engineer  acted  in  bad  faith,  presumed  he  acted 

with  proper  regard  for  rights  of  party,  259 
decision  of  engineer,  provision  for  appeal  from,  effect,  260 
decision  or  certificate  of  engineer,  refusal  to  make,  261 

540 


INDEX 

[References  are  to  eections] 

PERFORMANCE,  ETC.— Continued 

if  contract  makes  certificate  of  performance  condition  precedent,  if 
in  contemplation  of  contract  it  ought  to  be  given,  unreasonable  to 
refuse  it,  261 

contractor  excused  from  obtaining  when  unreasonably  or  in  bad- 
faith  refused,  261 

where  work  passed  and  approved  during  progress,  engineer  may  not 
re-examine  own  conclusions  and  refuse  certificate,  261 

approval  of  quarry  will  not  prevent  passing  on  quaUty  of  stone 
from  it,  261 

if  parties  put  practical  construction  on  contract,  no  certificate  re- 
quired as  to  extra  work,  provision  waived,  261 

decision,  power  to  change  when  made,  262 

certificate,  provision,  that  it  shall  be  conclusive  in  absence  of  mis- 
take, binding,  263 

decision  as  to  value  of  extra  work,  conclusive,  263 

when  implication  of  bad  faith  arises  from  certificate  of  engineer, 
263 

estoppel  clause,  provision  that  pubUc  body  not  precluded  by  return 
of  engineer,  how  far  effective,  264 

certificate  of  engineer,  when  not  binding  or  conclusive,  263,  265 

to  prevent  courts  from  considering  questions,  must  appear  subject 
within  submission,  265 

engineer  may  not  introduce  new  terms  into  contract,  265 

power  not  extended  to  disputes  under  verbal  agreement  for  extra 
work,  to  questions  of  ultimate  Uability  to  pay,  to  amount  of 
compensation  due,  or  to  grant  to  architect  power  to  construe 
contract,  265 

power  to  determine  meaning  of  drawings,  etc.,  not  submission  of 
contract  rights,  265 

liability  to  pay  liquidated  damages  or  damages  for  non-fulfillment 
outside  his  power,  265 

when  engineer  acts  as  agent  of  public  body  decision  not  binding,  265 

matters  within  scope  of  decision  not  conclusive,  if  not  the  result  of 
honest  judgment  and  made  in  good  faith,  265 

certificate  not  conclusive  when  based  on  erroneous  construction  of 
contract,  266 

deliberate  exclusion  of  work  actually  done,  not  binding,  266 

certificate  of,  not  conclusive  where  contract  illegal,  267 

if  contract  gives  absolute  right  to  oust  contractor  from  work,  ar- 
bitration clause  has  no  application,  268 

certificate,  not  necessary  to  produce,  where  contractor  driven  from 
work,  properly  performed  till  stopped,  268 

not  bound  to  produce,  where  party  puts  it  beyond  power  to  obtain 
evidence  of  approval,  268 

541 


INDEX 

[References  are  to  sectional 

PERFORMANCE,  ETC.— Continued 

provisions  for  certificate  of  performance  to  be  entitled  to  payment 

when  do  not  applj^  269 
certificate  of  engineer,  waiver,  270 
acceptance  of  work  by  person  appointed  to  supervise  is  ordinarily 

a  waiver,  271 
otherwise  if  contract  provides,  contractor  shall  be  responsible  for 

work  as  a  whole  until  accepted  by  public  body,  271 
Acceptance  of  work  different  from  contract,  through  unauthorized 
changes  by  engineer  and  made  in  ignorance  of  facts,  when  later 
discovered,  gives  right  of  action,  271 
PLANS  AND  SPECIFICATIONS.    See  Letting  of  Public  Contracts 
POWER  TO  CONTRACT 
inherent,  1 
express,  2 

enumeration  of,  not  a  limitation,  2 
sometimes  specific  grant  excludes  impUed,  2 
implied,  3 

public  bodies  authorized  to  do  act,  have,  like  natural  persons, 

the  power  to  contract,  3 
possess,  to  purchase  on  credit,  3 
none,  to  borrow  money,  3 

have,  to  carry  out  express  powers  and  obligations,  3 
Under  general  powers  granted  they  have  implied  authority: 
to  construct  streets  and  sidewalks,  3 
repair  them,  3 
hght  streets,  3 
construct  sewers,  3 
powers  to  build  sewer  provide  water  or  light,  imply  power  to  con- 
tract for  them,  3 
to  provide  a  sewer,  impUes  power  to  contract  for  sewage  disposal 
or  buy  a  right-of-way,  3 
to  abate  nuisance  impUes  power  to  remove  garbage  beyond  city 

limits,  3 
to  tax  does  not  imply  power  to  pay  for  disclosing  delinquents,  3 
to  erect  water  works  not  power  to  engage  in  plumbing  business,  3 
of  eminent  domain  will  not  imply  power  to  contract  to  move 

improvements  taken,  3 
to  sell  bonds  does  not  authorize  settlement  for  breach  of  con- 
tract to  sell,  3 
to  contract  implies  power  to  impose  reasonable  restriction,  3,  151 
to  grant  franchise  imports  right  to  impose  reasonable  restric- 
tions, 3 
Who  possesses  power,  4 

legislative  functions  may  not  be  delegated,  4 

542 


INDEX 

[References  are  to  sections] 

POWER  TO  CONTRACT— Confrnwed 

mmisterial  functions  may  be  delegated,  4 

persons  dealing  with  general  governing  agents  need   not  go 
behind  doings  to  inquire  about  extrinsic  irregularities,  4 
Limitations  on  power,  5 

persons  dealing  with  officers  bound  to  know  limitations,  5 
officers  cannot  make  contract  expressly  prohibited,  5 
officers  must  follow  prescribed  manner  of  contracting,  5 
statutes  relating  to  power  to  contract  must  be  strictly  followed,  5 
power  to  contract  depends  on  prior  appropriation,  5,  146 
available  unexpended  balance  insufficient,  5 
appropriation  later  exhausted  will  support  contract,  5 
payments  exceeding  value  of  services  rendered  or  supplies  deliv-ered 

prohibited  by  Congress,  5 
contracts  relating  to  public  improvements  limited  by  legislation,  5 
Exhaustion  of  power,  6 

a  grant  of  unlimited  power  not  exhausted  by  single  exercise,  6 

unlimited  grant  leaves  matter  discretionary  to  public,  6 

where  two  distinct  methods  authorized,  exercise  of  one  exhausts 

other,  6 
general  terms  in  a  statute  will  not  create  exclusive  franchise  or 
preclude  public  body  from  obtaining  public  utility  elsewhere 
or  erecting  own  plant,  6 
outstanding  contract  will  not  operate  to  exhaust  power  to  secure 

public  utility  from  another  source,  6 
exclusive  rights  to  light  streets  by  gas  will  not  prevent  electric 

contracts,  6,  80 
requiring  railway  companies  to  clean  streets  will  not  exhaust 

power  to  prevent  requiring  sprinkling,  6 
attempt  to  publish  will  not  deprive  further  publication,  6 
committee  authorized  to  contract  exhausts  power  by  one  and 
cannot  make  second  contract,  6 
POWER  TO  CONTRACT,  MANNER  OF  EXERCISING 

legislature  granting  full  power,  manner  of  its  exercise  discretionary 

with  governing  body,  17 
contract  under  such  power  made  by  vote  upon  motion  or  by  resolu- 
tion, 17 
not  essential  it  be  by  ordinance,  17 
contract  not  following  void,  17 
custom  not  complying  with,  cannot  bind,  17 
seal  not  necessary,  17 
if  statute  provides  vote  of  taxpayers,  omission  avoids  contract, 

17 
appropriation  prior,  if  essential,  contract  void,  5,  17,  145,  146 
certificate  of  head  of  department,  omitted,  contract  void,  17 

543 


INDEX 

(References  are  to  aectiona] 

PRACTICAL  CONSTRUCTION 

if  language  ambiguous,  of  great  aid,  193 

if  variance  from  literal  meaning  of  contract,  cannot  be  ignored,  193 
should  not  prevail  over  clear  and  definite  term  of  contract,  193 
has  no  effect  in  absence  of  knowledge  of  facts,  193 
estoppel  as  to,  193 

that  no  certificate  of  engineer  required  as  to  extra  work,  effect  of,  261 
PRELIMINARY  PROCEEDINGS,  DEFECTS  IN 

if  charter  requires  certain  acts  performed  before  contract  let,  omis- 
sion invalidates,  18 
defect  only  trivial,  slight  departure  will  not  destroy  proceedings,  18 
if  subject  matter  proper,  contract  invalid  for  irregularity,  liable  on 

implied  contract,  18 
essential  part  of  legislative  scheme  must  be  observed,  18 
special  provisions,  no  need  to  literally  perform  in  non-essential  par- 
ticulars, 19 
PRIOR  NEGOTIATIONS 

all  prior  negotiations  merged  in  written  contract,  179,  180 
subsequent  oral  agreements  may  vary  terms,  waive  contract  or  dis- 
charge it,  179,  180 
previous  and  contemporaneous  transaction  considered,  not  to  make 
contract,  but  to  understand  it,  179 
PRIVATE  ENTERPRISE,  POWER  TO  ENGAGE  IN 
rule  stated,  23 

history  of  development,  24 

courts,  view  of,  too  narrow,  25 

home  rule,  proper  objects  of  should  be  attained,  26 

views  of  Justice  Holmes — a  true  basis,  27 

municipal  enterprise,  limitations  on,  28 

municipalities  possess  no  implied  power  to  engage  in  private 
business,  29 
no  power  to  erect  buildings,  to  rent  or  lease  them  or  engage  in 
the  sale  of  commodities  without  express  authority,  29,  30,  40 
power  to  authorize  municipal  enterprise  exists  in  Legislature,  29,  30 
when  authorized,  money  raised  and  used  engaged  in  a  public  pur- 
pose, 30 
if  primary  object  to  serve  private  end,  illegal,  though  also  serves 

public  purpose,  30 
municipality  having  authority  to  erect  steam  plant  may  sell  surplus 

power,  30 
municipality  having  authority  to  sell  water  may  not  sell  it  to  neigh- 
boring cities,  30 
power  to  sell  ice  inferred  from  power  to  sell  water,  30 
power  to  repair  streets  will  not  imply  power  to  operate  stone  quarry,  30 
power  to  regulate  omnibuses  will  not  authorize  exclusive  grant,  30 

544 


INDEX 

[References  are  to  sections] 

PRIVATE  ENTERPRISE,  ETC.— Continued 

general  grant  of  power  will  not  authorize  pledge  of  credit  to  support 

private  enterprise,  30 
emergency  which  will  authorize  engaging  in  municipal  enterprise,  31 
what  power  possessed  by  Legislature  to  authorize,  32 
power  denied  to  legislature  to  authorize  certain  enterprises,  32 
fuel,  sale  of  by  municipalities,  33 

halls,  auditorium  and  buildings  for  assemblage,  35,  39 
usual  powers  of  municipalities  in  America,  36 
aid  to  private  enterprise  when  permitted,  37 
power  to  engage  in  ownership  and  operation  of  railroads,  38 
where  constitutional  provisions  indicate  counties  should  not  go  into 

railroad  business,  statute  will  not  be  sustained,  38 
statutes  authorizing,  not  invalid  because  imposing  heavy  debt  upon 

cities,  38 
buildings  may  be  used  incidentally  to  serve  private  purpose  either 

gratuitously  or  for  compensation,  39,  40 
public  buildings,  erection  of  and  renting  of  same,  40 
when  larger  than  needs  may  allow  portions  used  for  private  pur- 
poses for  rent  or  gratuitously,  40 
in  erecting,  may  make  reasonable  provision  for  probable  future 

needs,  40 
may  not  divert  from  public  to  private  use  space  needed  by  public,  40 
may  erect  memorial  hall  to  soldiers  and  sailors,  40 
public  libraries,  zo-ological  gardens  and  restaurants  may  be  erected 

in  a  public  park,  40 
a  State  capitol  may  be  erected  therein,  40 

buildings  in  a  park  may  not  be  leased  for  other  than  park  purposes,  40 
PROPERTY,  ACQUIRING  AND  HOLDING 

municipalities  possess  power  to  purchase  and  hold  realty,  75 
may  make  grants  for  settlement,  75 
may  take  real  or  personal  property  by  gift  or  devise,  75 
may  manage  farms  or  property  for  profit,  75 
may  take  voluntary  grant  of  easements  for  street,  75 
may  not  acquire  real  estate  to  donate,  75 
exceeding  powers,  who  may  question,  75 
PROPERTY, SALE 

municipality  may  sell  real  or  personal  property,  76 

no  power  to  sell  property  of  public  nature,  76 

may  sell  property  acquired  for  public  purpose  but  not  actually 

dedicated,  76 
sale,  power  of  does  not  permit  exchange,  76 
may  dedicate  own  lands  to  street  uses,  76 
may  bind  itself  by  covenant  to  keep  street  open,  76 
may  lease  common  lands  for  summer  cottages,  76 

545 


INDEX 

[References  are  to  sections] 

PROPOSALS.    See  Bids;  Letting  of  Public  Contracts 

PUBLIC  OFFICERS,  CONTRACT  TO  INFLUENCE  ACTION  OF. 

See  aho  Public  Policy 
agreement  tending  to  introduce  personal  influence  in  inducing  legis- 
lative action,  void,  48 
if  tendency  bad  sufficient  to  condemn,  49,  100 
oflBcial  position,  any  transaction  growing  out  of,  being  personal 

benefit,  void,  49,  100 
contract  produced  through  bribery  or  corruption  void,  49,  100 
to  do  legal  acts  aff'ecting  public  lands,  valid,  49 
lobbyists,  municipality  may  not  expend  funds  to  pay,  49 
division  of  territory,  may  employ  attorney  to  oppose,  49 
street  improvement,  purchasing  consents  for,  50 
PUBLIC  OFFICERS,  POWER  OF.    See  also  Ultra  Vires 

persons  dealing  with  officers,  boards  or  agencies  of  city,  state  or 

nation,  bound  to  inquire  into  power,  11 
contract  by  officer  wnthout  authority  may  be  ratified,  11 
where  public  body  had  no  power  to  contract,  can  only  be  ratified 

by  legislature,  11 
contractor  may  not  presume  authority,  11 
receipt  of  benefits  will  not  imply  a  promise,  11 
one  selling  materials  to  city  through  officer  without  power,  cannot 

recover,  11 
rule  if  material  capable  of  return,  11 
public  body  cannot  bind  by  guaranty  different  from  ordinance, 

11 
selectmen  cannot  bind  city  for  meals,  11 
authority  of  officer  must  come  from  legislature  or  general  governing 

body,  11 
where  the  contract  is  the  source  of  an  officer's  authority  rather 

than  specific  law,  he  has  authority  to  bind  not  only  in  the  begin- 
ning, but  in  the  progress  of  the  contract  as  well,  11 
pubhc  bodies  may  so  deal  with  third  persons  as  to  justify  assuming 

existence  of  authority,  11 
continued  receipt  of  benefits  of  contract  may  bind,  11 
public  officers,  when  public  bound  by  acts  of,  12 
public  officials  cannot  ratify  a  fraudulent  or  an  illegal  contract,  12 
acts  of  audit  transgressing  powers,  void,  12 
illegal  audit  may  even  be  attacked  collaterally,  12 
audit  under  legal  power  to  act  is  judicial  determination,  12 
it  cannot  be  re-audited,  or  collaterally  attacked,  12 
public  officials  may  bind  by  act  or  word  when  in  the  line  or  scope  of 

duty,  12 
contract  signed  by  officers  with  individual  seals  intended  as  public 

contract  sustained  as  such,  13 

546 


INDEX 

[References  are  to  sectiona] 

PUBLIC  OFFICERS,  ETC.— Continued 

no  action  lies  against  public  official  failing  to  award  contract,  even 
though  he  acts  maliciously,  14 
or  for  failure  to  take  bond,  345 
where  refusal  a  judicial  act,  must  act  in  good  faith,  14 
omission  by  public  agents  to  perform  extrinsic  act  as  foundation  of 

authority,   15 
rule  applies  to  failure  to  make  appropriations  and  to  exhaustion  of 

appropriations,  15 
payment  by,  in  excess  of  authority,  recovery  back,  67 
PUBLIC  OFFICERS,  PARTICULAR  OFFICERS,  POWERS  OF 
mayor  has  no  general  or  implied  power  to  bind  public  body,  16 
comptroller  can  only  act  within  authority  expressly  given,  16 
counsel   to  corporation  possesses  only  power  of  lawyer  retained, 

16 
armory  board,  no  power  to  employ  architect,  16 
PUBLIC  POLICY 

general  policy  not  to  restrict  power  to  contract,  100 
contract  opposed  to,  void,  100 
forbids  agreement  to  control 

business  activities  of  Government,  100 
the  administration  of  justice,  100 
appointments  to  office,  100 
course  of  legislation,  100 
to  influence  official  action,  100 
forbids  secret  agreements  whereby  officials  share  profits,  100 
agreements  tending  to  stifle  competition,  100 
to  combine  interests,  100 
to  submit  simulated  bids,  100 

to  influence  location  of  public  buildings,  when  against,  100 
offending  public  morals,  100 
PUBLIC  POLICY,  FEES  OF  PUBLIC  OFFICER 
agreement  to  pay  extra  compensation,  101 
agreement  to  pay  less  than  fee  fixed  by  statute,  101 
promise  of  candidate  for  public  office,  to  pay  fees  into  treasury  and 

accept  salary  only,  101 
acceptance  of  less  as  preventing  recovery  of  arrears,  101 
farming  out  collection  of  public  revenues,  101 
payment  to  attorneys  to  discover  lands  omitted  from  tax  list,  101 
PUBLIC  SQUARE  OR  COMMON 

contract  to  sell  land  dedicated  for,  76 

QUASI  CONTRACT.    See  also  Implied  Contracts 
partial  performance  of  invalid  contract,  279 

547 


INDEX 

[References  are  to  sections! 

RAILROADS.    See  also  Streets  and  Highways 

power  to  contract  to  aid,  37 
build  and  operate,  38 

municipality  operating  acts  in  private  capacity,  38 

private  spur,  power  to  authorize,  71 

power  to  revoke  vault  license  to  erect  railroad,  71 

power  to  compel  city  to  buy  stock  in,  8 

contract  fixing  rates  of  street  railroad  as  condition  of  consent,  how 
far  subject  to  police  power  of  state,  9 

relieved  from  statutory  duty  to  repair  streets  where  city  contracts 
for  repair  with  contractor,  185 
RATIFICATION.   See  Public  Officers,  Power  to  Contract;  Rescts- 

sion;  Ultra  Vires 
RE-LETTING 

after  once  advertising  may  re-let  without  competition,  unless  statute 
forbids,  150 

statute  has  no  application  where  pubhc  finishes  work  as  agent,  150 

if  statute  requires  abandoned  work  to  be  advertised,  this  necessary, 
150 

may  relet  without  advertising,  where  award  not  accepted  or  after 
acceptance  and  part  performance,  is  abandoned,  150 

to  hold  retained  percentage,  contract  as  relet  must  be  same  as  orig- 
inal, 150 

if  relet  at  less  cost,  saving  not  enure  to  original  contractor,  150 
RENUNCIATION— ANTICIPATORY  BREACH 

positive  refusal  to  perform  a  contract  is  immediate  breach,  304 

if  before  time  for  performance  of  mutually  executory  contract  ar- 
rives, one  party  notifies  other  he  will  not  perform,  latter  free  from 
obligations  of  agreement  and  may  sue  at  once,  or  may  wait  for 
time  of  performance  to  arrive  and  treat  contract  as  binding,  304 

does  not  apply  to  money  contracts  or  contracts  fully  performed, 
304 

if  contract  to  manufacture  goods,  and  during  manufacture  contract 
repudiated,  not  bound  to  complete,  304 

to  give  effect  to  renunciation,  must  operate  to  breach  the  entire 
contract  or  a  covenant  going  to  whole  consideration,  304 

if  one  repudiates  the  contract,  remedies  of  injured  party,  305,  307 

where  one  refuses  to  be  further  bound  by  a  contract,  there  is  in 
legal  effect  prevention  of  performance  by  other  party,  305 

election  to  treat  renunciation  as  a  breach  fixes  right  of  parties  and 
contract  relation  ceases  to  exist  except  for  recovery  of  damages, 
305 

failure  to  make  instalment  delivery  or  payment  under  contract, 
effect  of,  when  contract  terminated,  306 

continuing  contract,  renunciation  of,  307 

548 


INDEX 

(References  are  to  sections) 

RENUNCIATION— ANTICIPATORY  BREACH— Continued 

repudiation  of  continuing  contract  not  fully  performed  by  either, 
will  authorize  injured  party  to  treat  contract  ended,  307 

injured  party  not  bound  to  go  on  manufacturing  and  recover  dif- 
ference between  market  and  contract  price,  307 

if  one  party  voluntarily  disables  himself  or  prevents  the  other  from 
performing  before  time  of  performance  arrives,  breach  gives  im- 
mediate right  of  action,  307 

abandonment,  when  justified,  308 

breach  to  justify  abandonment  must  be  of  material  term  of  contract, 
condition  precedent  to  further  continuance,  308 

breaches  amounting  to  partial  failure  of  performance  relating  to 
covenants  merely,  are  compensated  in  damages,  308 

if  breach  goes  to  substance,  abandonment  justified  and  immediate 
suit  for  entire  damage,  308 

if  erroneous  claim  made,  reasonable  time  allowed  to  recede  from 
position,  308 
abandoimient  terminates  contract,  308 

if  injured  party  uses  term  "annul"  or  "cancel"  this  will  not  have 
technical  effect  of  rescission,  308 

pubUc  body  may  let  work  of  completion  to  another  and  charge 
reasonable    difference  in  cost,  308 
REPAIR— COVENANT  OF 

in  lease,  318 

of  structure,  318 

of  road  across  swamp  which  sinks,  195 

of  pavement,  185 
REPLEVIN 

of  goods  purchased  under  illegal  contract 
REPRESENTATIONS  IN  CONTRACT  AND  SPECIFICATIONS. 

See  Site,  Conditions  at;  Warranty  of  Performance 
RESCISSION 

public  bodies  possess  no  sovereign  right  of,  at  mere  pleasure,  242 

public  contracts  only  rescinded  under  same  conditions  as  contract 
with  natural  person,  242 

a  contract  lawfully  entered  into  cannot  be  annulled  by  re-considering 
its  approval,  242 

mere  negotiations  which  contemplate  a  written  contract  may  be  re- 
considered, 242 

public  contracts  may  be  discharged  by  mutual  agreement,  perform- 
ance, operation  of  law  or  breach,  242 

contract  substituted  for  another,  discharges  latter,  242 

discharge  by  breach  may  occur  by  repudiating  contract,  242 

may  be  terminated  by  making  it  impossible  to  perform,  even  if  voidy 
242 

549 


INDEX 
[References  are  to  sections] 

RESCISSION— Con^imied 

reserved  right  to  terminate  strictly  construed,  243 

termination,  arbitrary  right  of,  may  be  reserved,  243 

termination,  if  privilege  reserved,  because  work  not  satisfactory, 
reasonable  grounds  of  dissatisfaction  must  exist,  243 

annulment,  reserved  power  of,  may  not  be  exercised  for  default  if 
occasioned  by  pubUc,  243 

aimuhnent,  if  right  exercisable  upon  notice,  it  must  be  given,  162, 243 

waiver  of  right  of,  vnll  arise,  if  pubUc  body  fails  to  declare  contract 
forfeited  and  acquiesces  in  abandonment  by  contractor,  244 

if  all  work  abandoned  by  mutual  agreement  no  recovery  for  antici- 
pated profits  allowed,  244 

must  be  based  on  sufficient  grounds,  245 

if  permitted  in  specified  cases,  no  arbitrary  power  to  annul  on 
theor}'  contractor  not  a  proper  person,  245 

mistake  in  material  matters  is  appropriate  ground  for,  in  equity,  245 

mistake  unilateral,  rescission  for,  245 

fraud  as  ground,  245 

consideration,  inadequacy,  not  regarded  as  ground,  245 

default,  partial,  if  payable  in  damages,  contract  not  ended,  246 

breach  must  be  substantial  and  defeat  very  object  of  contract  be- 
fore, will  justify,  246 

default  by  public  body  authorizes  rescission  by  contraator,  246 

waiver  of,  247 

bringing  action  to  enforce  contract  after  knowledge  of  right  of,  bars, 
247 

acts  indicating  ratification  of  voidable  contract,  prevent,  247 

annul,  reserved  right  to,  may  be  waived,  247 

waiver  by  acceptance  of  incomplete  work,  247 

where  work  completed  and  accepted  may  not  rescind  and  refuse  to 
pay  compensation,  because  of  defects  approved  as  work  was  done, 
247 

acquiescence  in  continuance  of  work  after  ground  for  termination 
exists,  is  waiver,  247 

waiver  of  time  limit,  is  waiver  of  right  of  forfeiture,  247 

for  delay  in  delivery  of  material,  lost  on  failure  to  act  promptly,  247 

time,  failure  to  proceed  with  speed  required  to  finish  in  time  and 
acquiescence  in  continuance  of  work,  is  waiver  of,  247 

party  rescinding  must  place  other  parties  in  statu  quo,  248 

if  parties  may  not  be  placed  in  statu  quo,  equity  may  grant,  248 

if  party  receives  benefits  of  substantial  partial  performance  and 
retains  them,  is  bound  to  perform  his  part  and  is  limited  to  dam- 
ages, 248 

mistake  or  fraud,  rescission  for,  requires  restoration  of  status  quo,  248 

some  exceptions  to  rule,  248 

550 


INDEX 

[References  are  to  sections] 

RESCISSION— Con^mwed 

status  quo  sufficiently  restored  upon  requirement  to  pay  value  of 
work  then  done,  248 

effect  of,  249 

effect  of  use  of  words  "rescind"  and  "cancel,"  249 

contract  may  be  annuled  or  abandoned  and  yet  have  rights  arise 
thereunder,  249 

implied  obUgation  to  restore  statiis  quo  survives  rescission,  249 

right  to  receive  money  earned  prior  to  disaffirmance,  249 

quantum  meruit,  when  liable  on  after,  249 

public  body  may  abandon  or  terminate  contract  on  making  com- 
pensation, 249 

effect  of  substituting  one  contract  for  another,  where  damage  in- 
curred under  prior  contract,  249 

attempted,  proving  ineffective,  249 

retained  percentage,  effect  of  provision  to  forfeit,  on  annulment,  249 
RESERVED  RIGHT  TO  MAKE  ALTERATIONS 

provision  of,  valid,  160 

allows  no  liability  for  loss  of  profits,  160 

in  absence  of  such  provision,  no  right  to  change,  rescind  or  suspend 
contract  without  compensation,  160 

clause  permits  changes  owing  to  unforeseen  conditions  and  stopping 
work,  160 

if  contingency  not  expressly  covered  renders  performance  impossible 
and  substantially  changes  and  affects  remainder,  implies  power 
to  terminate,  160 

change  from  one  kind  of  construction  to  another  to  save  expense,  not 
justified,  160 

changes  made  in  good  faith  create  no  Uability,  160 

power  in  good  faith,  to  direct  changes,  does  not  permit  stoppage  in 
unfinished  state  so  as  to  annul  contract,  160 

if  nature  and  effect  of  clause  reserving  power  to  change  work  inter- 
feres with  free  competition  required,  invaUd,  160 
RESERVED  RIGHT  TO  SUSPEND  WORK 

such  provision  valid  if  properly  exercised,  161 

if  contract  provides  for,  without  compensation  except  extension  of 
time,  this  remedy  exclusive,  161 

clause  permitting,  when  deemed  for  best  interest,  does  not  permit 
suspension  because  no  money  to  pay  inspection,  161 

if  plain  and  unrestricted  and  gives  right  of  delay  without  Uability, 
will  have  effect,  161 
RESERVED  RIGHT  TO  ANNUL 

if  right  exercised,  must  keep  within  conditions,  162,  243 

if  exercisable  upon  stated  notice,  this  condition  precedent,  162,  243 

if  not  otherwise  provided,  notice  must  be  personal,  162 

551 


INDEX 

[References  are  to  sections] 

RESERVED  RIGHT  TO  ANNUL— Con^mwed 
and  must  usually  be  in  writing,  162,  175 
if  right  exercised,  contractor  entitled  to  recover  benefits  of  partial 

performance,  162 
as  aflfecting  mutuality,  163 
RETAINED  PERCENTAGE.    See  also  Liquidated  Damages 

duty,  how  far,  to  hold,  when  contractor  fails  to  pay  laborers  or 

materialmen,  339 
failure  to  keep  as  affecting  surety,  340 
liquidated  damages,  when  certain  amount  retained  as,  352 
forfeiture  of,  on  annulment,  effect  of  provision  for,  249 
reletting,  to  hold,  contract  must  be  same  as  original,  150 
set-off,  right  to  use  as,  to  pay  damages  for  breach  of  another  con- 
tract, 320 

SALES.   See  also  Rescission 

warranty  as  to  quality  or  quantity,  184 

sale  by  reference  to  lot  in  warehouse  or  factory  or  shipment  and 

use  of  words  "about"  or  "more  or  less"  referring  to  quantity, 

not  regarded  as  warranty,  184 
to  deliver  a  stated  amount  with  use  of  words  "more  or  less"  regarded 

as  estimate  merely,  184 
to  deliver  stamped  envelopes  and  wrappers  in  quantities  during 

stated  period  is  absolute  contract  to  supply  all  needed,  184 
water,  warranty  of  wholesomeness,  68 
SANITATION 

may  make  necessary  contracts  to  accomplish,  69 

exclusive  contract  for  removal  of  offensive  products  vaUd,  69 

police  power,  not  admit  arbitrary  invasion  of  personal  rights  or 

private  property,  69 
exclusive  privilege  given  under  general  power,  having  effect  to  de- 
stroy business  of  others,  69 
SET-OFF 

right  of  municipality  to  hold  retained  percentage  on  one  contract  to 

pay  damages  due  on  another,  320 
SITE 

if  contract  to  build  absolute,  must  make  substruction  to  support, 

no  matter  what  cost,  195 
road  built  across  swamp  with  agreement  to  keep  in  repair,  if  road 

sinks  must  restore  to  grade,  195 
provision  to  clear  site  and  grade  surface  requires  removal  of  high 

ground  within  foundation  wall,  195 
agreement  to  build  hatchway  and  select  elevators,  if  alterations 

necessary  to  permit  elevators  operate  in  hatchway,  burden  on 

pubhc,  195 

552 


INDEX 

(References  are  to  aectiona] 

SITE— Continued 

subsidence  of  soil  assumed  by  contractor,  195 

unforeseen  conditions  due  to  fault  of  public  body,  not  assumed,  195 

contractor  may  assume  working  order  of  existing  means  to  perform 

work,  195 
if  instrumentality  required  to  be  built  at  site,  contractor  may  assume 

will  satisfy  purpose  for  which  provided,  195 
representations  of  fact  as  to  conditions  of  work  under  contract,  196 
general  language  requiring  investigation,  effect  of,  196 
misled  by  erroneous  statements,  may  have  relief  in  equity,  196 
if  uninjured  parts  of  building  to  remain  and  public  body  strips 

building,  part  remaining  may  be  assumed  uninjured,  196 
representations  by  engineer,  when  binding,  196 
representations  by  individuals  who  compose  board,  when  binding,  196 
SPECIFICATIONS.    See  also  Agreements  Several  Forming   Con- 
tract; Agreements,  Instruments  Annexed  or  Referred  to 
necessity  of  definite,  113,  116 
conflict  between  and  contract,  91,  113 
STIPULATIONS  OF  CONTRACT 

officers  may  insert  reasonable  stipulations  to  protect  pubUc,  151 
for  doing  work  under  direction  of  engineer,  151 
for  instalment  payments  and  reserving  rights  until  final  pay- 
ment, 151 
to  annul  the  contract,  change  details,  or  suspend  work,  151 
for  doing  extra  work  at  contract  prices,  151 
to  add  to  or  reduce  amount  of  work,  151 

contractor  to  meet  all  loss  or  damage  from  nature  of  work,  151 
imposing  liability  for  damages  from  negligence,  151 
against  assignment,  151 
for  submission  of  disputes  to  engineer,  151 
to  obtain  material  from  public  body,  151 
to  purchase  material  from  citizens  of  public  body,  151 
arbitration,  stipulation  for, 

illegal,  if  courts  ousted  of  jurisdiction,  152 

may  qualify  right  of  action  and  make  arbitration  condition 

precedent  to  suit,  152 
submitting  all  future  controversies  to  arbitration,  invalid,  152 
to  submit  all  disputes  on  questions  of  price,  value  or  quantity, 

valid,  152 
indefinite  or  unreasonable  provisions,  not  sustained,  152 
to  settle  disputes  as  to  extra  work  by  providing  method  to  de- 
termine as  condition  precedent,  proper,  152 
parties  not  bound  by  mistake  of  arbitrator  which  implied  bad 
faith,  152 
stipulations,  what  they  may  or  may  not  provide,  153,  154,  155 

553 


INDEX 

[Referencea  are  to  sections] 

STIPULATIONS  OF  CONTRACT— Continued 

where  provisions  inserted  under  invalid  statute,  presumed  were  con- 
sidered invalid  and  disregarded  in  making  estimate  and  price  not 
enhanced,  154 
to  provide  maintenance  of  pavement  during  period  of  years  when 

sustained,  156 
provision  if  discrepancies  between  plans  and  specifications  to  be 

decided  by  engineer,  binding,  157 
provision  that  decision  by  engineer  allows  contractor  to  complete 
under  protest,  leaves  contractor's  rights  unimpaired,  157 
STREETS  AND  HIGHWAYS 
franchise  to  use  streets,  71 
for  a  street  railway,  71 
by  corporation  for  railway  spur,  9,  71 
for  vault  purposes  or  spur,  revocable  privilege,  71 
conducting  private  business  in,  71 
encroachment  of  walls  of  building  on,  71 
ordinance  authorizing  projection  of  building  into,  void,  71 
street  railway,  grant  to  use,  71 

requiring  bond,  paving,  or  grading  as  condition,  71 
erection  of  depot,  71 

discontinuance  when  public  interest  demands,  71 
validity  of  reserved  power  to  revoke,  71 
municipality  may  dedicate  own  lands  for,  76 
municipality  may  bind  itself  on  sale  of  land  to  keep  street  open,  76 
municipality  may  not  surrender  power  of  eminent  domain  by 

agreeing  to  keep  street  open,  9 
may  not  contract  away  duty  to  keep  safe,  9 
contract,  repair  clause,  in  to  maintain  pavement  by  contractor 
relieves  railroad  of  statutory  duty,  185 
SUBROGATION.    See  Bond  of  Contractor 
SUBSTANTIAL  PERFORMANCE 

substantial  performance,  defined,  281 

recovery  for  had  on  averment  of  full  performance  though  proof  falls 

short,  281-282 
recovery  permitted  by  one  in  good  faith,  although  slight  deviation, 

technical  or  unimportant,  omission  or  defect,  281 
failure  to  carry  out  material  part  of  contract,  not  substantial  per- 
formance, 281 
retention  of  benefits,  implies  promise  to  pay  for  the  partial  per- 
formance which  is  accepted,  281 
omissions  relating  to  matter  so  essential  as  to  defeat  object  of  party, 

not,  281 
rule  has  no  application  to  deviation,  wilful  and  intentional,  281 
question  of,  is  generally  question  of  fact  to  be  decided  by  jury,  281 

554 


INDEX 

(References  are  to  sections] 

SUITS 

liability  of  Government  and  sub-division  to,  364 

nation  and  State  may  contract,  but  without  consent  cannot  be  sued, 
364 

after  permitting  suit,  may  defeat  by  failing  to  make  appropriation 
to  pay  debt,  364 

municipality  having  power  to  contract,  hold  property,  and  exercise 
power  to  tax,  has  right  to  sue  and  be  sued,  364 

mere  territorial  sub-divisions  or  boards  cannot  sue  or  be  sued,  unless 
legislature  permits,  364 

public  bodies  may  avail  of  all  rights  and  remedies  afforded  to  in- 
dividuals, 368 

if  contract  provides  consequences  of  breach,  remedy  exclusive,  368 

assumpsit,  right  to  sue  on  for  amount  due  on  contract,  368 
SURETY.    See  Bond  of  Contractor;  Credit,  Loan  of 
SUSPENSION.    See  Breach;  Performance;  Reserved  Right  to 

THIRD  PERSONS— CONTRACT  FOR  BENEFIT  OF 

stranger  to  contract  may  not  enforce,  197 

liberal  modern  rule  permits  enforcement  by,  197 

if  intent  to  secure  benefit  to  residents  and  there  is  obligation  owing 
by  municipahty  to  resident,  may  bring  action,  197 

may  not  sue  on  mere  contract  of  indemnity,  197 
TIME  OF  PERFORMANCE 

if  contract  silent  as  to,  law  implies  reasonable  tune,  205 
TORT 

waiver  of,  and  suit  on  contract,  110 

defending  officer,  not  adoption  of,  110 

if  accompanies  acts,  not  prevent  implied  contract,  110 

indemnifying  officer,  for,  43 
TRUSTEE  ACTING  AS.    See  Credit,  Loan  of 

ULTRA  VIRES  CONTRACTS 

classification  of  ultra  vires  contracts,  51 

contract  expressly  prohibited,  void,  52,  90 

contract  prohibited  unless  prior  appropriation,  52 

contract  prohibited  unless  made  in  manner  prescribed,  52 

executory  ultra  vires  contract  not  enforceable,  53 

executed  contracts  sometimes  sustained  so  far  as  executed,  53 

defense  of,  sustained  where  properly  enforceable,  53 

defense  may  be  availed  of  though  not  pleaded,  where  contract 

contra  bonos  mores,  54 
some  jurisdictions  hold  defense  must  be  pleaded,  54 
invalid  in  part  may  be  severed,  55,  56 
illegal  clauses  not  main  or  essential  feature  severed  and  disregarded,  55 

555 


INDEX 

[References  are  to  sections] 

ULTRA  VIRES  CONTRACTS— Con^inw^d 

illustrations  of  severable  contracts,  56 

to  expend  more  than  authorized,  valid  up  to  amount  authorized,  57 

if  invalid  because  of  exceeding  debt  limit  and  contractor  only  re- 
ceives part  pajinent  for  complete  performance,  enforced,  57 

when  substance  of  contract  within  power,  manner  of  payment 
bej'ond,  57 

pajTnent  not  permitted  on  contract  beyond  scope  of  corporate  pur- 
poses, 58 

within  corporate  purposes,  but  unauthorized  merely,  enforced  against 
party  receiving  benefit,  59 

where  defect  of  power  in  making  contract  not  prohibited  by  statute, 
if  executed,  benefits  received,  estoppel  to  deny  validitj^,  59 

where  want  of  power  but  no  express  prohibition,  permits  recovery,  60 

receipt  of  benefit  of  money,  labor  or  property  under  contract  un- 
authorized but  not  prohibited,  creates  liability  for  benefits  re-" 
ceived,  60,  90 

where  power  defectively  or  irregularly  exercised,  public  body  liable,  61 

where  contract  valid  in  substance  but  invalid  in  extent  of  exercise 
of  power,  62 

where  want  of  power  to  enter  into  contract,  equitable  relief,  63 

to  cancel,  consideration  must  be  restored,  64 

ratification,  waiver,  65 

defense  of  illegality  may  not  be  waived  by  officers,  65 

nor  by  legislature  when  constitution  denies  recovery,  65 

contract  recognized  by  foreign  country,  not  enforced  if  immoral 
here,  65 

pubHc  body  may  ratify  acts  of  one  acting  in  its  behalf,  65 

rule  it  must  have  full  knowledge,  does  not  apply  where  from  its 
records,  chargeable  with  knowledge,  65 

estoppel,  66 

voluntary  payment — recovery  back  by  pubUc  body,  67 

payment  for  classes  of  work  forbidden  treated  as  over-payment, 
and  deducted,  67 
UNSUCCESSFUL  BIDDER.    See  Bids;  Rejection 
USAGE  AND  CUSTOM 

to  explain  doubtful  words,  may  not  contradict  or  vary  contract,  176 

party  claiming,  must  prove  it,  176 

party  proving,  not  permitted  to  construe  contract,  176 

provable  though  not  pleaded,  176 

VALIDITY  OF.    See  also  Contracts;  Ultra  Vires 
contracts  ultra  vires  because  illegal,  void,  90 
contracts  ultra  vires  because  unauthorized,  void  if  executory,  90 
if  executed  and  benefits  retained,  recovery  permitted,  90 

556 


INDEX 

[References  are  to  sectional 

VALIDITY  OF-€ontinued 

void  contracts  are  no  contracts,  90 

contracts  voidable,  when,  90 

validity  of  public  contracts  generally  presumed,  90 
VENUE  OF  ACTIONS: 

if  municipality  located  in  several  counties,  365 

if  municipalities  are  domestic  corporations,  365 

condition  precedent  to  suit,  366 
VOLUNTARY  PAYMENT 

recovery  back  of  money  illegally  paid,  67 
VOLUNTEER.    See  Implied  Contract 

WARRANTY.    See  also  Covenants  Implied  by  Law;  Implied  Terms; 
Site;  Warranty  of  Performance 

none  implied  as  to  wholesomeness  of  water,  68 

conditions  at  site,  195,  196 
WARRANTY  OF  PERFORMANCE.    See  also  Covenants  Implied  by 
Law 

no  implied  warranty  that  structure  suitable  for  purposes  intended,  159 

no  implied  warranty  that  work  will  accomplish  results  expected,  159 

warranty  of  sufficiency  of  work  measured  by  plans,  not  warranty 
work  will  accomplish  purposes,  159 

express  warranty  work  will  accomplish  purposes,  binding,  159 

warranty  of  work  to  remain  in  good  condition  is  warranty  against 
all  defects,  whatever  origin,  159 

agreement  by  public  body  to  furnish  plans,  implies  skill  of  architect 
to  make  them,  159 

agreement  not  to  do  particular  thing,  but  do  it  particular  way,  puts 
risk  on  public  body,  159 

no  warranty  implied  as  to  a  mere  means  to  the  thing  contracted  for,  159 
WATER  AND  LIGHTING,  68 

power  to  provide  from  grant  of  general  powers  denied,  68 

power  to  provide  must  be  express,  68 

some  jurisdictions  hold  impUed  power  as  a  fundamental  and  neces- 
sary incident,  68 

power  to  provide  implies  power  to  contract  to  supply,  68 

making  contract  with  private  water  company  does  not  preclude 
supply  from  other  source,  68 

grants  to  supply  not  extended  to  be  exclusive,  68 

repeal  of  statute  authorizing  city  to  buy  plant  leaves  it  free  to  com- 
pete, 68 

contract  to  light  streets  for  fixed  period,  rescinded  by  repeal  of 
statute,  68 

because  statute  passed  empowering  cities  to  deal  with  utility  com- 
pany does  not  compel  cities  to  deal,  68 

557 


INDEX 

[References  are  to  sections] 

WATER  AND  LIGETING— Continued 

grant  of  power  to  light  streets  not  a  grant  to  erect  plant,  68 
exclusive  franchise,  no  authority  to  give  without  express  power,  68 
perpetual  franchise,  power  to  grant  denied,  68 
right  to  base  pajTnent  on  taxes,  68 
power  to  provide  water  implies  power  to  supply  ice,  68 
power  to  supply  inhabitants  of  other  municipalities,  68 
no  implied  power  to  give  free  water  to  induce  institution  to  locate,  68 
supplying  water,  exercise  of  private  business  power,  68 
liable  for  breach  of  contract  or  negligence  as  private  individual,  68 
warranty,  none  implied  that  water  wholesome,  68 
supply  of  water  to  own  fire  department,  acts  in  governmental  capac- 
ity, 68 
contract  impUed  to  pay  for  water,  68 
WRITTEN  CONTRACT 
necessity  of,  136 

oral  public  contract  binding  if  statute  of  frauds  satisfied,  136 
minutes  signed  by  clerk  satisfy  statute,  136 
offer  accepted  by  letter  or  telegram  sufficient,  136 
if  proposal   follows  advertisement,   acceptance  binding  as  if 
formal  contract  executed,  136 
Federal  statute 

admit  valid  executory  contract  in  emergency,  137 

an  ultimate  formal  instrument  is  contemplated  to  be  signed,  137 

executed  contract  valid,  even  though  statute  not  complied  with, 

137 
although   final   written   contract   intended,   if   correspondence 
expresses  agreement,  neither  can  evade  obligation  by  refusing 
to  sign  formal  contract,  137 
must  be  in  writing  and  signed  by  contracting  parties,  137 
writing  not  always  essential,  137 

under  Federal  statute  modification  in  writing  may  be  waived,  139 
State  statute 

provision  for  written  contract  held  mandatory,  138 
applicable  alike  to  executed  and  executory  contracts,  138 
where  writing  required,  contract  not  in  writing,  void,  138 
in  some  jurisdictions,  recovery  for  reasonable  value  permitted 

upon  executed  contract,  138 
if  statute  requires  all  contracts  affecting  public  affairs  in  writing, 

even  modification  must  be  in  writing,  139 
if  writing  required,  opening  of  proposals  and  adoption  of  resolu- 
tion of  award  do  not  complete  contract,  140 
if  contract  reduced  to  writing  and  signed  by  one  of  the  parties 
and  accepted  and  acted  upon  by  other,  it  binds  as  if  signed 
by  both,  141 

558 


INDEX 

[References  are  to  sections] 

WRITTEN  CONTRACT— Con/mwed 

bidder  accepting  terms  and  specifications  of  bid  cannot  be  re- 
quired to  sign  a  different  contract,  142 
public  body  after  bids  opened  may  not  change  its  terms,  142 
public  officer  may  not  enter  into  negotiations  with  contractor 

to  reduce  bid  submitted,  142 
executed  contract,  not  avoided  by  use  of  words  differing  from 
specifications,  142 
WRITTEN  WORDS 

prevail  over  printed  or  typewritten,  181 
WRITING  CONSTRUED  AGAINST  PARTY  DRAWING 

if  ambiguous  or  obscure,  writing  construed  against  party  preparing, 

183 
deeds  or  grants  construed  against  grantor,  even  the  public,  183 


559 


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